Standard,Inc

question 4

Multiple Choice

Standard,Inc.reported net income of $35 million for last year.Depreciation expense totaled $20 million and capital expenditures came to $7 million.Free cash flow is expected to grow at a rate of 6% for the foreseeable future.Stuart faces a 40% tax rate and has a 0.40 debt to equity ratio with $120 million (market value) in debt outstanding.Standard's equity beta is 1.25,the risk-free rate is currently 5% and the market risk premium is estimated to be 7.5%.What is the current value (in millions) of Standard's equity?

• A) $237.34
• B) $352.42
• C) $427.42
• D) $556.79
• E) $655.55

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Definitions:

Alternative Dispute Resolution

A range of processes and techniques used to resolve disputes without traditional litigation, including mediation and arbitration.

Arbitration

A method of dispute resolution where a neutral third party renders a decision, which is usually binding.

Mediation

A form of alternative dispute resolution where a neutral third party helps conflicting parties to reach a mutually satisfactory agreement.

Conciliation

A method of alternative dispute resolution where a conciliator helps parties in a dispute to reach a mutually satisfactory agreement to resolve their issues.