Jay's Jams Inc

question 22

Multiple Choice

Jay's Jams Inc.was just established with an investment of $5 million into stereo equipment.Jay expects his company to generate $800,000 a year for the next 10 years, followed by $1 million a year for the following 10 years.If Jay's cost of capital is 15%, find the market value and book value of his company.(Use values in millions)

• A)Market value = $9.0 million; book value = $5.0 million
• B)Market value = $5.0 million; book value = $5.3 million
• C)Market value = $5.3 million; book value = $5.0 million
• D)Market value = $7.0 million; book value = $5.0 million

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Definitions:

Respiration

Process of life in which oxygen is used to oxidize organic fuel molecules, providing a source of energy, carbon dioxide, and water; movement of air into and out of the lungs, the exchange of gases with blood, the transportation of gases in the blood, and gas exchange between the blood and the tissues.

Chloride Shift

Diffusion of chloride ions into red blood cells as bicarbonate ions diffuse out; maintains electrical neutrality inside and outside the red blood cells.

Bicarbonate Ions

An anion (HCO3-) that plays a critical role in maintaining the pH balance of the body, acting as a buffer in blood plasma.

Carbon Dioxide

A gas with no color or smell that results from the combustion of carbon and organic materials as well as from the breathing process. It exists naturally in the atmosphere and is taken in by plants during the process of photosynthesis.