Jason Limited has 100 units of outstanding bonds with a coupon rate of 10%, in which the market price and the face value

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answerhappygod
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Jason Limited has 100 units of outstanding bonds with a coupon rate of 10%, in which the market price and the face value

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Jason Limited has 100 units of outstanding bonds with a coupon
rate of 10%, in which the market price and the face value of each
bond is $2,000. It is expected that the earnings before interest
and tax (EBIT) of the firm would remain constant at $400,000 each
year, and the unlevered cost of capital is at 20%. Calculate the
firm value of Jason Limited with the consideration of Modigliani
and Miller (MM) Proposition 1 with tax if the tax rate is 25%.
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