Simithy Medical Disposal Is a New and Expanding Entry in the Bio-Waste/bio-Hazard

question 37

Multiple Choice

Simithy Medical Disposal is a new and expanding entry in the bio-waste/bio-hazard industrial sector. As of year-end it had $50 million in invested capital of which $40 million is long-term debt. Simithy Medical's 2 million shares trade for $45 each. The company has an EVA of $8.3 million and a cost of capital of capital of 12%. Assuming book value of debt equals market value, what is Simithy's Future Growth Value (FGV) ?

• A) $10.8 million
• B) $20.8 million
• C) $69.2 million
• D) $249.2 million
• E) $350.1 million

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Definitions:

Liabilities

Financial obligations of a business that represent debts or amounts owed to others, due to past transactions or events.

Assets

Economic resources owned by a business that are expected to benefit future operations.

Owner's Equity

The residual interest in the assets of a business after deducting liabilities; represents the owner's claim on the business assets.