Use the Information for the Question(s)below

question 88

Multiple Choice

Use the information for the question(s) below.
KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt.KD has had consistently stable earnings,and pays a 21% tax rate.Management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares.
-The value of KD's unlevered equity is closest to:

• A)$600 million.
• B)$470 million.
• C)$390 million.
• D)$400 million.

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Definitions:

Neutrons

Tiny particles located within an atom's nucleus, possessing no electrical charge and having a mass that is marginally higher than protons.

Isotope

Variants of an element that contain the same number of protons but different numbers of neutrons in their nuclei.

Neutrons

Subatomic particles, found in the nucleus of an atom, that have no electrical charge and a mass slightly larger than that of protons.

Element

A substance that cannot be broken down into simpler substances by chemical means and is made up of atoms all with the same number of protons.