Leisure Vacations Is an Unlevered Firm with Aftertax Net Income

question 34

Multiple Choice

Leisure Vacations is an unlevered firm with aftertax net income of $57,980,a cost of capital of 13.2 percent,and a tax rate of 35 percent.What is the value of this firm?

• A)$285,507.58
• B)$318,906.15
• C)$401,008.47
• D)$439,242.42
• E)$368,511.12

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Definitions:

Yield to Maturity

The total return anticipated on a bond if it is held until its maturity date, considering all interest payments and principal repayment.

Coupon Rate

The interest rate on a bond that the issuer promises to pay annually or semi-annually to the bondholder.

Market Yield

The annual income on an investment divided by the market price of the investment, typically expressed as a percentage.

Premium

The amount by which the price of a security exceeds its principal amount or its value at issuance.