New Schools,Inc

question 51

Multiple Choice

New Schools,Inc.expects an EBIT of $7,000 every year forever.The firm currently has no debt,and its cost of equity is 15 percent.The firm can borrow at 8 percent and the corporate tax rate is 34 percent.What will the value of the firm be if it converts to 50 percent debt?

• A)$31,796.47
• B)$36,036.00
• C)$37,407.16
• D)$37,552.08
• E)$38,119.30

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Definitions:

Endocrine System

A network of glands in the body that produce hormones, which regulate metabolism, growth and development, tissue function, sexual function, reproduction, sleep, and mood, among other things.

Physiological Psychology

Physiological psychology is a branch of psychology that studies the relationship between behavior and the body’s physical processes and structures.

Psychological Approach

A perspective or method in psychology that emphasizes understanding human behavior and mental processes.

Positive

Characterized by the presence rather than the absence of distinguishing features, or constructive, optimistic, or confident in nature.