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:

Sigmund Freud

An Austrian neurologist best known for founding psychoanalysis, a method for treating psychopathology through dialogue between a patient and a psychoanalyst.

Phallic Stage

A phase in Freudian psychosexual development, occurring roughly between the ages of three and six, where the libido is focused on the genital area.

Psychosexual Development

A theory proposed by Freud, outlining the stages of development from infancy through adulthood in which sexual energy (libido) is focused on different areas of the body.

Penis Envy

In Freudian theory, a female desire to have a penis.