Molotov Cranberry Cocktail Corp Finds That the Value of the Firm

question 52

Multiple Choice

Molotov Cranberry Cocktail Corp finds that the value of the firm is equal to $100,000,000 with no debt.It knows that if it issues new debt,the value of the tax shield will be $3,000,000 while the value of the bankruptcy costs,outside agency costs and inside agency costs will be $1,000,000,$2,000,000,and $4,000,000 in that order.What will the value of Molotov be if it issues the debt?

• A) $0
• B) $96,000,000
• C) $100,000,000
• D) none of the above

---

Definitions:

Figurine

A small ornamental sculpture representing a human, deity, or animal, often made from ceramic, metal, or stone.

Goddess Tlaltecuhtli

An Aztec deity representing the earth, often depicted in art as a fearsome figure associated with creation and sustenance.

Great Temple

Typically refers to a significant religious building or structure in various cultures, often dedicated to a major deity or serving as a central place of worship.

Tenochtitlán

The capital city of the Aztec Empire, located on an island in Lake Texcoco, in what is now Mexico City, known for its complex urban design and significant temples.