The Aggie Company Has EBIT of £70,000 and Market Value

question 50

Multiple Choice

The Aggie Company has EBIT of £70,000 and market value debt of £100,000 outstanding with a 9% coupon rate.The cost of equity for an all equity firm would be 14%.Aggie has a 35% corporate tax
Rate.Investors face a 20% tax rate on debt receipts and a 15% rate on equity.Determine the value of
Aggie.

• A)£120,000
• B)£162,948
• C)£258,537
• D)£263,080
• E)£355,938

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