Lamont Corp

question 37

Multiple Choice

Lamont Corp. is debt-free and has a weighted average cost of capital of 12.7 percent. The current market value of the equity is $2.3 million and there are no taxes. According to M&M Proposition I, what will be the value of the company if it changes to a debt-equity ratio of .85?

• A) $18,110,236
• B) $1,955,000
• C) $15,393,701
• D) $2,705,882
• E) $2,300,000

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Definitions:

Leptin

A hormone produced by fat cells that helps to regulate energy balance by inhibiting hunger.

Major Mineral

Essential minerals required by the body in relatively large amounts for various physiological functions.

Copper

A chemical element with the symbol Cu and atomic number 29, known for its high thermal and electrical conductivity, commonly used in electrical equipment and plumbing.

Total Metabolic Rate

The total amount of energy expended by an organism in a given time period to maintain all bodily functions while at rest.