The Globe Incorporated Has EBIT of $30 Million for the Current

question 27

Multiple Choice

The Globe Incorporated has EBIT of $30 million for the current year.On the firm balance sheet,there is $90 million of debt outstanding that carries a coupon rate of 9 percent.Investors seek a return of 12 percent on the firm,and the firm has a corporate tax rate of 40%.What is the value of the firm?

• A) $152,000,000
• B) $160,000,000
• C) $174,000,000
• D) $186,000,000

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Definitions:

Marginal Costs

The additional cost incurred by producing one more unit of a good or service.

Average Costs

Total costs (fixed and variable) divided by the total quantity of output produced, representing the cost per unit of production on average.

Variable Costs

Costs that change in proportion to the good or service that a business produces.

Shut Down

The cessation of operations, often temporarily, by a business or organization.