The Brassy Co

question 70

Multiple Choice

The Brassy Co. has expected EBIT of $910, debt with a face and market value of $2,000 paying an 8.5% annual coupon, and an unlevered cost of capital of 12%. If the tax rate is 34%, what is the value
Of the Brassy's equity?

• A) $3,258
• B) $3,685
• C) $5,685
• D) $6,325
• E) $7,005

---

Definitions:

Simple Interest

Interest calculated only on the principal amount, or on that part of the principal amount which remains unpaid.

Principal

The principal refers to the initial amount of money lent or invested, excluding any interest or growth.

Annual Rate

The interest rate for a period of one year, often used as a benchmark for savings or loan interest calculations.

Investment

The process of distributing funds or other resources with the goal of earning returns or profits.