Use the Information for the Question(s)below

question 17

Multiple Choice

Use the information for the question(s) below.
Consider two firms,With and Without,that have identical assets that generate identical cash flows.Without is an all-equity firm,with 1 million shares outstanding that trade for a price of $24 per share.With has 2 million shares outstanding and $12 million in debt at an interest rate of 5%.
-According to MM Proposition 1,the stock price for With is closest to:

• A)$8.00.
• B)$24.00.
• C)$6.00.
• D)$12.00.

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Definitions:

Workers' Compensation

A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment, in exchange for mandatory relinquishment of the employee's right to sue their employer.

Course of Employment

Pertains to the activities an employee does within the scope of their job or duties as authorized or expected by their employer.

Family and Medical Leave Act

A United States federal law that provides employees with unpaid, job-protected leave for certain family and medical reasons.

Interstate Commerce

The trade, traffic, or transportation of goods or services across state lines within the United States.