Question: Question 25 3 points Sr Ans Use below information for following two questions (924-925). AAA Corporation and BBB Corporation are identical in every way except

Question 25 3 points Sr Ans Use below information for following two questions (924-925). AAA Corporation and BBB Corporation are identical in every way except their capital structures. AAA Corporation an als equity firm has a million shares of stock outstanding, currently worth $25 per share. BB8 Corporation uses leverage in its capital structure the market value of 888's debt is $250mil, and its cost of debt is 3.5 percent. Each tim is expected to have earnings before interest and tax of $175mil. in perpetuity Assume that every investor can borrow at 35 percent per year Corporate tax rate is 35 and personal tax rate on bond interest Income is 30% Q23. If the personal tax rate on bond interest Income Increases to 25 (from 30%). what is the new value or BBB cofporations? $900 mil 5875 mil 5892.56 mil $962.5 mil $250 ml

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