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:

Featural Analysis

A process in cognitive psychology where visual stimuli are broken down into their basic elements or features for recognition and processing.

Prototype Matching

A theory in cognitive psychology that proposes the process of object recognition involves comparing stimulus with an internally stored prototype or the most typical example of a category.

Perceptual Learning

The process of learning to recognize patterns, objects, and environments through sensory experience.

Subjective Contours

Visual illusions in which contours are perceived where none actually exist, suggesting the mind's ability to create edges and shapes from visual cues.