Use the Following Information to Answer the Question(s)below

question 40

Multiple Choice

Use the following information to answer the question(s) below.
Wyatt Oil has assets with a market value of $600 million,$70 million of which are cash.It has debt of $250 million,and 20 million shares outstanding.Assume perfect capital markets.
-If Wyatt Oil distributes the $70 million as a dividend,then its debt-to-equity ratio after the dividend will be closest to:

• A)0.7.
• B)0.9.
• C)1.0.
• D)1.1.

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Definitions:

Competitive Labor Market

A market where multiple firms compete to hire workers, and no single employer has the power to influence wages or employment conditions significantly.

Marginal Resource Cost Curve

A graphical representation showing the change in total cost incurred by producing one more unit of a resource, helping firms decide the optimal level of resources to employ.

Labor Supply Curve

A graphical representation showing the relationship between the wages offered and the quantity of labor workers are willing to supply.

Monopsonistic Labor Market

A market condition where there is only one buyer (employer) for many sellers of labor, giving the buyer significant control over wages and employment conditions.