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    Firm Valuation

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    Your firm has debt worth 200,000, with a yield of 9%, and equity worth $300,000. It is growing at a 5% rate, and its tax rate is 40%. A similar firm with no debt has a cost equity of 12%. 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

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    https://brainmass.com/business/interest-rates/firm-valuation-497546

    Solution Preview

    Dear Customer,

    The answer is $587,500 (with a small approximation).

    I have attached the document with the steps in proper formatting.

    MM - Firm Valuation

    Your firm has debt worth 200,000, with a yield ...

    Solution Summary

    The solution has a document with the steps in proper formatting.

    $2.19

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