Use the Information for the Question(s)below

question 89

Multiple Choice

Use the information for the question(s) below.
Shepard Industries expects free cash flow of $10 million each year.Shepard's corporate tax rate is 21%,and its unlevered cost of equity is 10%.The firm also has outstanding debt of $40 million and it expects to maintain amount of debt permanently.
-The value of Shepard Industries without leverage is closest to:

• A)$114 million.
• B)$50 million.
• C)$100 million.
• D)$64 million.

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Definitions:

Legal-Rational Authority

Is typical of modern societies. It derives from respect for the law. Laws specify how one can achieve office. People generally believe these laws are rational. If someone achieves office by following these laws, people respect their authority.

Legitimately Accomplish

To achieve or complete something in a manner that is lawful, ethical, and recognized as proper and valid.

Legitimate Power

This type of power is derived from a formal position or role within an organization or society, recognized and accepted by others as rightfully held, allowing the person or group to exert influence or control.

Coercive Institutions

Institutions, such as prisons or the military, where control is maintained through force, and compliance is enforced among its members.