Lester's Has Expected Earnings Before Interest and Taxes of $74,800

question 30

Multiple Choice

Lester's has expected earnings before interest and taxes of $74,800, an unlevered cost of capital of 11.6 percent, and debt with both a book and face value of $84,000. The debt has a coupon rate of 6.35 percent and the tax rate is 24 percent. What is the value of this company?

• A) $403,136
• B) $347,600
• C) $510,229
• D) $387,094
• E) $428,507

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Definitions:

Bureau of Labor Statistics

A government agency that collects, processes, analyzes, and disseminates essential statistical data related to labor market activity, working conditions, and price changes in the economy.

Employment Projections

Forecasts about the labor market, predicting future employment trends, job growth or decline in various sectors, and skills that will be in demand.

Median Pay

The middle value of wages in a sample, such that half of the employees earn less and the other half earns more.

OOH

Stands for Occupational Outlook Handbook, a publication by the United States Bureau of Labor Statistics providing career information on duties, education and training, pay, and outlook for hundreds of occupations.