Use the Information for the Question(s)below

question 40

Multiple Choice

Use the information for the question(s) below.
KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt.KD has had consistently stable earnings,and pays a 21% tax rate.Management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares.
-After the recapitalization,the value of KD's levered equity is closest to:

• A)$670 million.
• B)$400 million.
• C)$330 million.
• D)$442 million.

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Definitions:

Radius

A bone in the forearm on the lateral side (thumb side), which runs parallel to the ulna and is involved in forearm rotation.

Pectoral Girdle

The skeletal framework in the upper torso that provides attachment for the arms and includes the clavicles and scapulae.

Axial Skeleton

The part of the skeleton that includes the skull, vertebral column, ribs, and sternum.

Trochlear Notch

is a deep, curved notch at the proximal end of the ulna, articulating with the trochlea of the humerus in the elbow joint.