Solved

The Following Information Has Been Presented to You About the Gibson

question 95

Multiple Choice

The following information has been presented to you about the Gibson Corporation. $\begin{array} { l c } \text { Total assets } & \$ 3,000 \text { millionTax rate } &25\%\\\text { Operating income (EB TT) } & \$ 800 \text { millionDebt ratio } &0\%\\\text { Interest expense } & \$ 0 \text { millionW } \mathrm { ACC } &10\%\\\text { Net income } & \$ 480 \text { millionM/B ratio } &1.00×\\\text { Share price } & \$ 32.00 \mathrm { EPS } = \text { DPS }&\$3.20\end{array}$ The company has no growth opportunities (g = 0) , so the company pays out all of its earnings as dividends (EPS = DPS) .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 8%.If the company makes this change, what would be the total market value (in millions) of the firm?

Evaluate the impact of market changes on consumer surplus.

Identify the total consumer surplus from graphical data or demand curves.

Determine consumer surplus at different price points for both individual consumers and aggregate markets.

Calculate the total consumer surplus in transactions involving multiple buyers and varying willingness to pay.

Definitions:

Testosterone Levels

The concentration of the hormone testosterone in the blood, which plays key roles in male sexual development, muscle mass, and mood regulation.

Mental Rotation Task

A cognitive spatial task that involves rotating mental representations of two-dimensional and three-dimensional objects to match or identify them.

Variance

A statistical measure that represents the dispersion of a dataset relative to its mean, indicating how spread out the data points are.

SAT Scores

Standardized test results used primarily in the United States for college admissions, assessing readiness and predicting academic success.