Lansing Corporation Reported Net Income of $65 Million for Last

question 5

Multiple Choice

Lansing Corporation reported net income of $65 million for last year.Depreciation expense totaled $15 million and capital expenditures came to $6 million.Free cash flow is expected to grow at a rate of 4.5% for the foreseeable future.Lansing faces a 40% tax rate and has a 0.35 debt to equity ratio with $260 million (market value) in debt outstanding.Lansing's equity beta is 1.35,the risk-free rate is currently 5% and the market risk premium is estimated to be 6.5%.What is the current total value of Lansing's equity (in millions) ?

• A) $655.90
• B) $737.54
• C) $840.61
• D) $951.26
• E) $1,025.95

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Definitions:

R-chart

A type of control chart used for monitoring the range of variation within a sample.

Sampling Distribution

The probability distribution of a given statistic based on a random sample, used to make inferences about the population.

R-chart

A control chart used for monitoring the variability of a process.

Control Limits

Boundaries in process control, within which a process operates efficiently, used to detect signals or causes of variations that could indicate a problem.