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

question 21

Multiple Choice

Use the following information to answer the question(s) below.
Taggart Transcontinental pays no dividends,but spent $4 billion on share repurchases last year.Taggart's equity cost of capital is 13% and the amount spent on repurchases is expected to grow by 5% per year.Taggart currently has 2 billion shares outstanding.
-Taggart's market capitalization is closest to:

• A)$25 billion.
• B)$31 billion.
• C)$40 billion.
• D)$50 billion.

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Definitions:

Monopoly Power

The ability of a single supplier to control the market price and exclude competitors.

Elasticity of Demand

An assessment of the degree to which the quantity of a good demanded changes in response to its price movement.

Marginal Cost

The additional expenditure involved in making one more unit of a product or service.

Retail Price

The total cost at which a product or service is sold to the end consumer, including any markups by retailers.