Consultant Has Collected the Following Information Regarding Young Publishing: the Company

question 57

Multiple Choice

consultant has collected the following information regarding Young Publishing: The company has no growth opportunities The consultant believes that if the company moves to a capital structure financed with 20% debt and 80% equity (based on market values) that the cost of equity will increase to 11% and that the pre-tax cost of debt will be 10%.If the company makes this change, what would be the total market value (in millions) of the firm?

• A)$3,200
• B)$3,600
• C)$4,000
• D)$4,200
• E)$4,800

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Definitions:

Direct Marketing

A type of advertising strategy that sends promotional messages directly to potential customers individually, rather than through a mass medium.

Vending Machines

Automated machines that dispense items such as snacks, beverages, and tickets to consumers after a payment has been made.

Freestanding Kiosks

Freestanding Kiosks are standalone booths or stalls located in public places, used for selling goods or services or for informational purposes.

Consumer Electronics

Electronic equipment intended for everyday use by individuals, including devices like smartphones, tablets, and laptops.