Cool Refreshments Has Bonds Outstanding with a Face Value of $211,000

question 56

Multiple Choice

Cool Refreshments has bonds outstanding with a face value of $211,000 that are selling at par.It also has 14,000 shares of stock outstanding that are selling for $16.20 a share.The all-equity value of the firm is $408,000.The tax rate is 35 percent.What is the value of the financial distress costs? Assume there are no other claims on the firm.

• A)$44,050
• B)$46,800
• C)$46,220
• D)$45,100
• E)$46,550

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