How Much Will a Firm Need in Cash Flow Before

question 20

Multiple Choice

How much will a firm need in cash flow before tax and interest to satisfy debt holders and equity holders if: the tax rate is 35%, there is $13 million in common stock requiring a 10% return, and $6 million in bonds requiring an 6% return? (Use the values in dollar.)

• A)$1,392,000
• B)$1,488,000
• C)$2,360,000
• D)$2,480,000

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