Use the Table for the Question(s)below

question 99

Multiple Choice

Use the table for the question(s) below.

-Banco Industries expects sales to grow at a rapid rate over the next 3 years,but settle to an industry growth rate of 5% in year 4.The spreadsheet above shows a simplified pro forma for Banco Industries.Banco Industries has a weighted average cost of capital of 12%,$50 million in cash,$60 million in debt,and 18 million shares outstanding.If Banco Industries can reduce their operating expenses so that EBIT becomes 12% of sales,by how much will their stock price increase?

• A)$2.80
• B)$3.36
• C)$4.98
• D)$8.89
• E)$10.12

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Definitions:

Collective Unconscious

A concept in analytical psychology, introduced by Carl Jung, referring to the part of the unconscious mind that is derived from ancestral memory and experience and is common to all humankind.

Jung

Carl Jung, a Swiss psychiatrist and psychoanalyst who founded analytical psychology and introduced concepts such as the collective unconscious and archetypes.

Humanist Approach

A psychological perspective that emphasizes individual potential and stresses the importance of growth and self-actualization.

Free Will

The concept that individuals have the power to make choices that are not predetermined by past events or natural laws.