Dairy Isle Has a Value of $59,000 in a Good

question 21

Multiple Choice

Dairy Isle has a value of $59,000 in a good economy and $48,000 in a recession.The firm has $50,000 of debt.The probability of a recession is 32 percent.The firm is considering a project that would change the firm values to $63,000 in a good economy and $46,000 in a recession.Which one of these statements correctly describes the effects of this project?

• A)The bondholders and stockholders equally share the increase in firm valuation.
• B)The bondholders are unaffected by the project.
• C)The shareholders gain an amount equal to 68 percent of the increase in the firm's value.
• D)The shareholders gain $2,080 while the bondholders are unaffected.
• E)The project transfers $640 from bondholders to stockholders.

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Definitions:

Psychodynamic Therapies

A group of therapies that focus on revealing and resolving unconscious conflicts, motivations, and inner tensions, based on psychoanalytic principles.

Mental Disorders

Health conditions characterized by alterations in thinking, mood, or behavior associated with distress and/or impaired functioning.

Carl Rogers

An influential psychologist best known for developing the client-centered approach to psychotherapy and his concept of self-actualization.

Client-Centered Therapists

Therapists who practice a humanistic approach focusing on creating a non-judgmental, empathetic, and accepting environment for clients.