McKenzie, Inc

question 54

Multiple Choice

McKenzie, Inc., reported EBIT of $8.5 million for last year. Depreciation expense totaled $5 million and capital expenditures came to $2 million. Free cash flow is expected to grow at a rate of 2.5% for the foreseeable future. McKenzie faces a 21 percent tax rate and has a .50 debt to equity ratio with $20 million (market value) in debt outstanding. McKenzie's equity beta is 1.4, the risk-free rate is currently 5 percent and the market risk premium is estimated to be 7.5 percent. McKenzie has 10 million shares of common stock outstanding. What is the current value of a share of McKenzie stock (in millions) ?

• A)$6.62
• B)$7.32
• C)$8.45
• D)$9.76
• E)$10.25

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Definitions:

Transitions

Refers to changes or movements from one state, condition, or phase to another, often marking significant life events or societal shifts.

Post-Structuralism

A philosophical and theoretical movement critiquing structuralism's rigid frameworks and emphasizing the instability of meaning and the complexity of societal structures.

Growing Old

The natural process of aging, characterized by gradual changes in physical, cognitive, and social capabilities over time.

Incurable Disease

A disease that cannot be cured or adequately treated and that is likely to cause the death of the patient or a chronic condition that a patient will have to live with for the rest of their lives.