Epiphany Is an All-Equity Firm with an Estimated Market Value

question 31

Multiple Choice

Epiphany is an all-equity firm with an estimated market value of $500,000. The firm sells $150,000 of debt and uses the proceeds to purchase outstanding equity. Compute the weight in equity and the weight in debt after the proposed financing and repurchase of equity.

• A) 0.15, 0.85
• B) 0.18, 0.82
• C) 0.30, 0.70
• D) 0.70, 0.30

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Definitions:

Mobility

The ability to move freely and easily, crucial for performing activities of daily living and enhancing quality of life.

Fecal Impaction

A condition where hard stool becomes stuck in the rectum or colon, making it difficult to have a bowel movement.

Valsalva Maneuver

A technique involving deep breath and then forcibly exhaling while keeping the mouth and nose closed, used in medicine to test heart function and in other applications.

Flatulence

The accumulation of gas in the digestive system leading to the release of gas through the anus.