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Question
Eccles Inc.
Eccles Inc., a zero growth firm, has an expected EBIT of $100,000 and a corporate tax rate of 30%. Eccles uses $500,000 of 12.0% debt, and the cost of equity to an unlevered firm in the same risk class is 16.0%.
Refer to the data for Eccles Inc.What is the value of the firm according to MM with corporate taxes?a. $475,875
b. $528,750
c. $587,500
d. $646,250
e. $710,875
Answer
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