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31 Aug 2018

Forbidden Fruit Extracts expects its earnings before interest and taxes to be $325,000 a year forever. Currently, the firm has no debt. The cost of equity is 16.3 percent and the tax rate is 35 percent. The company is in the process of issuing $2 million of bonds at par that carry a 6.5 percent annual coupon. What is the unlevered value of the firm? $1,296,012 $969,325 $747,485 $431,971 $371,429

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Nelly Stracke
Nelly StrackeLv2
1 Sep 2018

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