The Montana Hills Co

question 1

Multiple Choice

The Montana Hills Co. has expected earnings before interest and taxes of $8,100,an unlevered cost of capital of 11%,and debt with both a book and face value of $12,000. The debt has an annual 8% coupon. The tax rate is 34%. What is the value of the firm?

• A) $48,600
• B) $50,000
• C) $52,680
• D) $56,667
• E) $60,600

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