Gomez Computer Systems Has an EBIT of $200,000, a Growth

question 8

Multiple Choice

Gomez computer systems has an EBIT of $200,000, a growth rate of 6%, and its tax rate is 40%. In order to support growth, Gomez must reinvest 20% of its EBIT in net operating assets. Gomez has $300,000 in 8% debt outstanding, and a similar company with no debt has a cost of equity of 11%.
-According to the MM extension with growth, what is Gomez's value of equity?

• A) $1,492,000
• B) $1,529,300
• C) $1,567,533
• D) $1,606,721
• E) $1,646,889

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Definitions:

Avoidant Personality Disorder

A mental health disorder characterized by a long-standing pattern of extreme social inhibition, feelings of inadequacy, and sensitivity to rejection.

Histrionic Personality Disorder

A personality disorder characterized by a pattern of excessive attention-seeking and emotionally charged behaviors.

Cognitive-Behavioral

Refers to a psychotherapeutic treatment that helps patients understand the thoughts and feelings that influence behaviors.

Psychodynamic

A psychological perspective that emphasizes unconscious processes and past experiences affecting current behavior.