Use the Tables for the Question(s) Below

question 34

Multiple Choice

Use the tables for the question(s) below.
Estimated 2005 Income Statement and Balance Sheet Data for Ideko Corporation
The following are financial ratios for three comparable companies:

-Based upon the average EV/EBITDA ratio of the comparable firms,if Ideko holds $6.5 million of cash in excess of its working capital needs,then Ideko's target market value of equity is closest to:

• A) $155 million
• B) $157 million
• C) $165 million
• D) $191 million
• E) $193 million

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Definitions:

Homogeneous Product

Goods that are perfectly identical in quality, style, and substance, making them indistinguishable from products produced by competing companies.

Kinked Demand Curve Model

A model in oligopoly markets suggesting that firms may not change their prices because an increase could be ignored by rivals, while a decrease might be matched.

Price Stability

A situation in an economy where prices in general do not change significantly over time, minimizing uncertainty and conducive to economic growth.

Oligopolies

Market structures characterized by a small number of firms that have significant market power, which can influence prices and output levels.