Poutine Cheese Co

question 7

Multiple Choice

Poutine Cheese Co.operates in a world with zero taxes and zero risk of financial distress.The firm has a debt/equity ratio of 2.The cost of debt is 6% and the cost of equity for Poutine is 15%.If the firm's EBIT (a perpetuity) is $10,000,then the market value of the firm is:

• A) $47,619
• B) $66,667
• C) $111,111
• D) $166,667

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