Refer to data for Kitto Electronics.According to the compressed adjusted present value model,what is Kitto's unlevered value?
A) $1,296,000
B) $1,440,000
C) $1,600,000
D) $1,760,000
E) $1,936,000

Question

Quizplus · Accepted Answer

The unlevered value of Kitto Electronics can be calculated using the compressed adjusted present value (CAPV) model, which is:

Unlevered value = Enterprise value + (Tax benefit of debt × Debt) - Cash and marketable securities

Plugging in the values from the table, we get:

Unlevered value = $1,600,000 + (0.4 × $600,000) - $400,000
Unlevered value = $1,760,000

Therefore, the correct answer is C, $1,600,000.

Refer to Data for Kitto Electronics