Use the Information for the Question(s)below

question 54

Multiple Choice

Use the information for the question(s) below.
Consider two firms,Chihuahua Corporation and Bernard Industries that are each expected to pay the same $1.5 million dividend every year in perpetuity.Chihuahua Corporation is riskier and has an equity cost of capital of 15%.Bernard Industries is not as shaky as Chihuahua,so Bernard has an equity cost of capital of only 10%.Assume that the market portfolio is not efficient.Both stocks have the same beta and an expected return of 12%.
-The market value for Bernard is closest to:

• A)$12.0 million.
• B)$10 million.
• C)$15.0 million.
• D)$12.5 million.

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Definitions:

Authorization Card

A document signed by employees to indicate their support for a union to represent them in collective bargaining with their employer.

Collective Bargaining

Negotiations between an employer and a group of employees aimed at agreements to regulate working salaries, working conditions, benefits, and other aspects of workers' compensation and rights.

Authorization Cards

Documents signed by employees to show support for union representation, often used in the process of forming or certifying a new union.

Bargaining Unit

A collection of workers who share common interests and are represented by a single union in negotiations with their employer.