Use TheUse the Firm Has Only Been Listed on the Stock

question 35

Multiple Choice

Use theUse the firm has only been listed on the stock exchange for a short time,you do not have an accurate assessment of Nielson's equity beta.However,you do have the following data for another firm in the same industry: Nielson has a much lower debt-equity ratio of .5,which is expected to remain stable,and Nielson's debt is risk free.Nielson's corporate tax rate is 21%,the risk-free rate is 5%,and the expected return on the market portfolio is 10%.
-Nielson's share price is closest to:

• A)$19.57.
• B)$24.40.
• C)$27.50.
• D)$31.20.

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Definitions:

Family Business Feud

Disagreements or conflicts within a family-owned enterprise, often affecting its operations and management.

Operating Approaches

The strategies, methods, or procedures implemented by individuals or organizations to execute tasks and achieve objectives.

Work Responsibilities

Duties and tasks assigned to an employee or a team within an organization.

Franchise

A type of business wherein a franchisor grants a franchisee the right to use its trademark, products, and business methods in exchange for a fee.