LKP, Inc Has an Unlevered Cost of Capital of 14%, a a Cost

question 295

Multiple Choice

LKP, Inc. has an unlevered cost of capital of 14%, a cost of debt of 9%, a 34% tax rate, and an EBIT of $60,000. The company has $120,000 in total assets, no accounts payable, and $70,000 in total equity. What is the value of LKP, Inc.?

• A) $265,857
• B) $271,009
• C) $282,857
• D) $291,009
• E) $299,857

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Definitions:

Formal Training

Education or instruction in a specific field or profession, typically provided in a structured and systematic way by an educational institution or organization.

B.F. Skinner

An American psychologist and behaviorist who developed the theory of operant conditioning, regarding how behavioral responses can be reinforced by rewards or discouraged by punishments.

Stimulus Situation

An event or environment that evokes a response from an organism or individual.

Psychosexual Conflicts

A term from Freudian psychology referring to tensions and unresolved feelings that arise from different stages of sexual development.