Schultz Security Inc

question 20

Multiple Choice

Schultz Security Inc.is an all equity firm.At the end of the current year,the CFO expects EBIT to be $6M,and the same earnings are expected annually in perpetuity.The company is not growing,so CAPEX and investments in net working capital are zero.Schultz's shareholders require a return of 12%.Schultz has 10 million shares outstanding.The corporate tax rate is 40%.What is the market value of Schultz's shares?

• A) $0.72
• B) $2.0
• C) $3.0
• D) $4.0
• E) $5.0

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