Back Woods Coffee Has Expected Earnings Before Interest and Taxes

question 313

Multiple Choice

Back Woods Coffee has expected earnings before interest and taxes of $34,500, an unlevered cost of capital of 14%, and debt with both a book and face value of $20,000. The debt has an annual 7% coupon. The tax rate is 35%. What is the value of the firm?

• A) $167,179
• B) $174,015
• C) $177,778
• D) $203,518
• E) $241,414

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