The Montana Hills Co

question 31

Multiple Choice

The Montana Hills Co. has expected earnings before interest and taxes of $17,100, an unlevered cost of capital of 12.4 percent, and debt with both a book and face value of $25,000. The debt has an annual 6.2 percent coupon. If the tax rate is 34 percent, what is the value of the firm?

• A) $91,016.13
• B) $137,903.23
• C) $99,516.13
• D) $106,666.67
• E) $146,403.23

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Definitions:

Manufacturing Overhead

All overhead costs related to the production process, apart from direct materials and direct labor expenses.

Adjusted Cost of Goods Sold

The cost of goods sold after adjustments for changes in inventory levels, returns, or allowances have been made.

Cost of Goods Available

The cost of goods available represents the total cost of inventory available for sale during a certain period, calculated as beginning inventory plus purchases minus ending inventory.

Schedule of Cost

A detailed report showing the breakdown of the cost components including materials, labor, and overhead for a project or production process.