Houston Tools Has Expected Earnings Before Interest and Taxes of $236,800,an

question 5

Multiple Choice

Houston Tools has expected earnings before interest and taxes of $236,800,an unlevered cost of capital of 12.65 percent,and a tax rate of 35 percent.The company has $420,000 of debt that carries a 7 percent coupon.The debt is selling at par value.What is the value of this firm?

• A)$796,758.89
• B)$1,363,758.89
• C)$1,216,758.89
• D)$1,413,758.89
• E)$1,636,758.89