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Accounting

Problem:

Kline Construction is an all-equity firm that has projected perpetual earnings before interest and taxes of $879,000. The current cost of equity is 18.3 percent and the tax rate is 34 percent. The company is in the process of issuing $6.2 million of 8.5 percent annual coupon bonds at par.

Required:

Question: What is the levered value of the firm?

A. $5,278,164

B. $5,541,085

C. $6,422,225

D. $6,713,185

E. $7,385,695

Note: Provide support for your underlying principle.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168632

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