Async Inc. and Sync Corp. both have the same EBIT of $5 million and tax rate of 35%. Async is all-equity financed with a cost of capital of 13%, whereas Sync has debt of $8 million. What is Sync’s firm value using the M&M Proposition? Select one: a. $15,250,000 b. $17,500,000 c. $19,750,000 d. $25,000,000 e. $27,800,000

Intermediate Financial Management (MindTap Course List)
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Author:Eugene F. Brigham, Phillip R. Daves
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Chapter11: Determining The Cost Of Capital
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Async Inc. and Sync Corp. both have the same EBIT of $5 million and tax rate of 35%. Async is all-equity financed with a cost of capital of 13%, whereas Sync has debt of $8 million. What is Sync’s firm value using the M&M Proposition?

Select one:
a. $15,250,000
b. $17,500,000
c. $19,750,000
d. $25,000,000
e. $27,800,000
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