Houston Tools Has Expected Earnings Before Interest and Taxes of $189,400,an

question 72

Multiple Choice

Houston Tools has expected earnings before interest and taxes of $189,400,an unlevered cost of capital of 12.87 percent,and a tax rate of 34 percent.The company has $318,000 of debt that carries a coupon rate of 6.2 percent.The debt is selling at par value.What is the value of this firm?

• A)$996,758.89
• B)$1,079,402.05
• C)$978,758.89
• D)$1,113,758.89
• E)$1,036,758.89

---

Definitions:

Attachment Behaviors

Actions or patterns of behavior that seek proximity to a specific attachment figure to provide comfort, security, or safety.

Self-Fulfilling

A prediction or expectation that causes itself to become true due to the behavior it induces.

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, which affects purchasing power and inflation.