Lahm Co. keeps a constant debt policy. The company has an expected EBITDA that perpetually grows...
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Lahm Co. keeps a constant debt policy. The company has an expected EBITDA that perpetually grows at a 1.90% annual rate. All the assets are fully depreciated. At the moment the debt is $18,000,000, its cost is 3.45% and it bears no systematic risk. The unlevered cash flow next year will be $3,095,450, the beta of unlevered equity is 1.12 and the market risk premium is 5.25%. If the tax rate is 35%, what is the value of the levered firm? (a) $37,029, 259 (b) $41,659,427 (c) $45,325,011 (d) $47,961,507 Lahm Co. keeps a constant debt policy. The company has an expected EBITDA that perpetually grows at a 1.90% annual rate. All the assets are fully depreciated. At the moment the debt is $18,000,000, its cost is 3.45% and it bears no systematic risk. The unlevered cash flow next year will be $3,095,450, the beta of unlevered equity is 1.12 and the market risk premium is 5.25%. If the tax rate is 35%, what is the value of the levered firm? (a) $37,029, 259 (b) $41,659,427 (c) $45,325,011 (d) $47,961,507
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Related Book For
Financial Accounting
ISBN: 978-0324645576
10th edition
Authors: W. Steve Albrecht, James D. Stice, Earl K. Stice
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