Lansing Corporation Reported Net Income of $65 Million for Last

question 66

Multiple Choice

Lansing Corporation reported net income of $65 million for last year. Depreciation expense totaled $15 million and capital expenditures came to $6 million. Free cash flow is expected to grow at a rate of 4.5 percent for the foreseeable future. Lansing faces a 21 percent tax rate and has a .35 debt to equity ratio with $260 million (market value) in debt outstanding. Lansing's equity beta is 1.35, the risk-free rate is currently 5 percent, and the market risk premium is estimated to be 6.5 percent. What is the current total value of Lansing's equity (in millions) ? (Assume Lansing had no interest expense for the year.)

• A)$655.90
• B)$788.65
• C)$840.61
• D)$951.26
• E)$1,025.95

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Definitions:

Antabuse Therapy

A treatment regimen involving the administration of disulfiram, used to support the recovery of people with alcohol dependence by producing unpleasant effects when alcohol is consumed.

Addiction

Addiction is a psychological and physical inability to stop consuming a chemical, drug, activity, or substance, even though it is causing psychological and physical harm.

Relapse Prevention

Strategies and techniques employed to prevent a recurrence of a previous undesirable behavior or condition, such as substance abuse or a depressive episode.

Stressful Situations

Conditions or scenarios that lead to tension or anxiety in individuals.