Use the Following Information to Answer the Question(s) Below

question 62

Multiple Choice

Use the following information to answer the question(s) below.

Nielson Motors (NM) has no debt. Its assets will be worth $600 million in one year if the economy is strong, but only $300 million if the economy is weak. Both events are equally likely. The market value today of Nielson's assets is $400 million.

-Suppose the risk-free interest rate is 4%.If Nielson borrows $150 million today at this rate and uses the proceeds to pay an immediate cash dividend,then according to MM,the expected return of Nielson's stock just after the dividend is paid would be closest to:

• A)-17.5%.
• B)-12.5%.
• C)12.5%.
• D)17.5%.

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Definitions:

Need-summary

A concise summary that identifies and outlines the specific needs or requirements of a client or situation, often used in sales to tailor solutions effectively.

Sales Presentation

A formal pitch or demonstration given by a salesperson to propose a product or service to potential buyers.

Industrial Equipment

Machinery and tools designed for use in various industries, including manufacturing and construction.

Sales Presentation

A structured conversation or pitch designed to persuade a potential customer to purchase a product or service.