Luther Corporation's Stock Price Is $39 Per Share and the Company

question 3

Multiple Choice

Luther Corporation's stock price is $39 per share and the company has 20 million shares outstanding.Its excess cash in 2009 is $23.4.If EBIT is 41.2 and tax rate is 35%,its Return on Invested Capital in 2009 is closest to:

• A)0.104
• B)0.064
• C)0.038
• D)0.068

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Definitions:

Friendly Merger

A merger agreed upon by all parties involved, where the companies willingly combine due to perceived mutual benefits.

Hostile Merger

A takeover attempt that is made against the wishes of the target company's management and board of directors.

Merger Negotiations

Discussions and strategic planning between two or more companies with the goal of combining their operations, typically to achieve synergies.

Activist Investors

Investors who use an equity stake in a corporation to put pressure on its management to enact changes they believe will increase shareholder value.