Bruce & Co

question 70

Multiple Choice

Bruce & Co.expects its EBIT to be $100,000 every year forever.The firm can borrow at 10 percent.Bruce currently has no debt,and its cost of equity is 20 percent.The tax rate is 34 percent.What will the value of Bruce & Co.be if the firm borrows $54,000 and uses the loan proceeds to repurchase shares?

• A)$280,130
• B)$346,600
• C)$348,360
• D)$378,900
• E)$381,520

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Definitions:

Team Building

The process of creating a cohesive and functional group of individuals who work effectively together towards common goals.

Supportive Climates

Work environments that foster a sense of safety, encouragement, and recognition, enabling employees to feel valued and motivated.

Symptoms Of Groupthink

Characteristics or signs indicating a group is prioritizing unanimity and cohesion over critical analysis, which can lead to poor decision-making.

Groupthink

A phenomenon in decision-making where the desire for consensus in a group leads to uncritical acceptance of ideas, suppressing dissent and leading to suboptimal outcomes.