A fiRm Has a 34% Tax Rate, EBIT of $400

question 339

Multiple Choice

A firm has a 34% tax rate, EBIT of $400, total debt of $600, and an unlevered value of $1,000. What is the value of the firm with debt?

• A) $604
• B) $816
• C) $940
• D) $1,136
• E) $1,204

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Definitions:

McClelland's Motivation Theory

A theory that identifies three primary motivational needs: the need for achievement, the need for affiliation, and the need for power, which influence human behavior.

Need For Achievement

An individual's desire for significant accomplishment, mastering of skills, control, or high standards.

Need For Affiliation

A person's desire to build and maintain strong, positive relationships with others.

Need For Power

A personal drive to influence, control or have authority over others, as described in McClelland's theory of needs.