Kitto Electronics Data Kitto Electronics Expects an EBIT of $200,000 for Year-1.EBIT Is

question 32

Multiple Choice

Kitto Electronics Data
Kitto Electronics expects an EBIT of $200,000 for Year-1.EBIT is expected to grow at 6% thereafter.The tax rate is 25%.In order to support growth, Kitto must reinvest 20% of its EBIT in net operating assets.Kitto has $300,000 in 8% debt outstanding, and a similar company with no debt has a cost of equity of 11%.
-Refer to data for Kitto Electronics.Using the compressed adjusted present value model, what is Kitto's value of equity?

• A) $2,020,000
• B) $2,070,500
• C) $2,122,263
• D) $2,175,319
• E) $2,229,702

---

Definitions:

Chair Form

A specific, stable conformation of cyclohexane that minimizes steric strain, resembling a chair.

D-Talose

A type of sugar, specifically a monosaccharide, that is part of the aldohexose family and is known for its optical activity.

Methyl β-D-Talopyranoside

A methyl glycoside formed from the β-D-Talopyranose form of talose, demonstrating how sugars can be chemically modified to glycosides.

Aglycone

The non-sugar portion of a glycoside molecule, which becomes free when the glycosidic bond is hydrolyzed.