The Montana Hills Co

question 31

Multiple Choice

The Montana Hills Co. has expected earnings before interest and taxes of $17,100, an unlevered cost of capital of 12.4 percent, and debt with both a book and face value of $25,000. The debt has an annual 6.2 percent coupon. If the tax rate is 34 percent, what is the value of the firm?

• A) $91,016.13
• B) $137,903.23
• C) $99,516.13
• D) $106,666.67
• E) $146,403.23

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Definitions:

Constructive Dismissal

A situation where an employee resigns due to the employer's behavior or changes to their job condition, effectively being forced out without a formal dismissal.

Employment Relationship

The formal or informal agreement between an employer and an employee, defining terms of employment, rights, and responsibilities.

Self-directed Work Teams

Teams composed of members who collectively manage their work and make the decisions traditionally handled by their supervisor.

Downsizing

The process of reducing the size of a company's workforce to cut costs or improve efficiency, often resulting in layoffs.