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

---

Definitions:

Critique

An analysis or evaluation of a subject, work, or performance, often highlighting its strengths and weaknesses from the critic's perspective.

Communism

An ideology focused on politics and economics that supports a society without classes, where the community collectively owns and manages the means of production.

Conflict Theory

A theoretical framework that views society as an arena of inequality generating conflict and social change.

Functionalism

A theoretical perspective in social science that emphasizes the societal structures which exist to maintain stability and order in society.