Use the Information for the Question(s)below

question 35

Multiple Choice

Use the information for the question(s) below.
Consider two firms, With and Without, that have identical assets that generate identical cash flows. Without is an all-equity firm, with one million shares outstanding that trade for a price of $24 per share. With has two million shares outstanding and $12 million in debt at an interest rate of 5%.
-According to MM Proposition I, the stock price for With is closest to:

• A)$24.00
• B)$6.00
• C)$12.00
• D)$8.00

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Definitions:

Ethical Conduct

Behavior that is consistent with a set of moral principles or standards governing the appropriate conduct for an individual or group.

Moral Dilemma

A situation in which a person must choose between two or more actions, each of which has moral implications that may conflict with each other.

Mandate

An official order or commission to do something, often seen as a form of authorization.

Undue Suffering

Refers to excessive or unnecessary pain, distress, or hardship that is not justified or warranted by the circumstances.