Timbuktu Technologies Is an All-Equity Firm That Is Currently Trading

question 35

Multiple Choice

Timbuktu Technologies is an all-equity firm that is currently trading at $22 per share,with 50 million shares outstanding.You believe that by replacing management,you can increase the value of the firm by 50%.What is the maximum amount of value you can extract in a leveraged buyout for 50% of the outstanding shares?

• A)$550 million
• B)$1.1 billion
• C)$1.65 billion
• D)$650 million
• E)$225 million

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Definitions:

Observational Learning

A learning process where individuals change their behaviors or acquire new information by watching the actions of others.

Classical Conditioning

The learning method that occurs through repeated pairings of two stimuli, resulting in a response that at first is triggered by the second stimulus but in time is triggered by the first stimulus.

Operant Conditioning

The act of learning in which the intensity of a behavior is transformed by the application of rewards or punishments.

Instrumental Learning

Also known as operant conditioning, it is a learning process through which the strength of a behavior is modified by reinforcement or punishment.