Assume That to Fund the Investment Taggart Will Take on $150

question 7

Multiple Choice

Assume that to fund the investment Taggart will take on $150 million in permanent debt with the remainder of the investment funded through issuance of new equity.Assume Taggart will incur a 2% (after-tax) underwriting fee on the new debt issue and a 5% underwriting fee on the issuance of new equity.If management believes Taggart's current share price of $25 is $3 less than its true value,then the NPV of Taggart's new rail line is closest to:

• A)$185 million
• B)$195 million
• C)$200 million
• D)$235 million

Identify the reasons why firms maintain cash balances and the purposes of holding marketable securities.

Understand the application and benefits of just-in-time inventory systems.

Understand the principle of comparative advantage and its role in maximizing world output through specialization.

Recognize the reasons for international trade, including differences in resource endowments, economies of scale, and differences in tastes.

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Definitions:

Job Rotation

Movement of employees from one job to another in an effort to relieve the boredom often associated with job specialization.