Lantern Corporation Reported Net Income of $55 Million for Last

question 1

Multiple Choice

Lantern Corporation reported net income of $55 million for last year. Depreciation expense totaled $20 million and capital expenditures came to $5 million. Free cash flow is expected to grow at a rate of 4.5% for the foreseeable future. Lantern faces a 40% tax rate and has a 0.45 debt to equity ratio with $185 million (market value) in debt outstanding. Lantern's equity beta is 1.3, 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 Lantern's equity (in millions) ?

• A) $655.90
• B) $731.20
• C) $840.95
• D) $919.46
• E) $1,025.95

---

Definitions:

Identification

The psychological process where an individual assimilates an aspect, property, or attribute of another and is transformed, wholly or partially, by the model the other provides.

Androgyny

A blend of both masculine and feminine characteristics in an individual's personality, appearance, or behavior.

Gender-typing

The process of associating objects, activities, roles, or traits with one gender in ways that conform to cultural stereotypes.

Influential Individual

A person who has the power to affect the opinions, behaviors, or decisions of others through their actions, status, or expertise.