The Hifalutin Co

question 34

Multiple Choice

The Hifalutin Co. has perpetual EBIT of $3,000. It has no debt in its capital structure, and its cost of equity is 15%. The corporate tax rate is 40%. There are 300 shares outstanding. Hifalutin has announced that it will borrow $3,750 in perpetual debt at 8% and use the proceeds to buy up stock. What will the stock price now be after the recapitalization?

• A) $40.
• B) $35.
• C) $45.
• D) $50.

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Definitions:

Socially Withdrawn

A state where an individual pulls back from social interactions and activities, often as a response to stress, depression, or anxiety.

Nursing Diagnoses

Clinical judgments about individual, family, or community experiences/responses to actual or potential health problems/life processes which provide the basis for selecting nursing interventions.

Hoards

Accumulates items in a compulsive manner, often leading to cluttered living spaces that can affect the well-being of the individual.

Alprazolam

A prescription medication primarily used in the treatment of anxiety and panic disorders, belonging to the class of medications called benzodiazepines.