Lamont Corp. is debt-free and has a weighted average cost of capital of 12.7 percent. The current market value of the equity is $2.3 million and there are no taxes. According to M&M Proposition I, what will be the value of the company if it changes to a debt-equity ratio of .85? Multiple Choice $2,300,000 $2,705,882 $15,393,701 $18,110,236 $1,955,000

Option A. $2,300,000

Explanation:

The first proposition of M & M model says that the debt to equity does not have any impact on the share value of the company because the value of the company shares are calculated on the basis of the discounted future cash flows generated by the company. So according to M&M Proposition I, the value of company shares calculated here is $2.3 million for 100% equity financed company which will remain same for all debt to equity structure.

step 1: create a plan

step 2: inventory facility equipment/assets

step 3: create preventive maintenance procedures

step 4: create preventive maintenance schedules

step 5: train your maintenanceteam

step 6: analyze – adjust - improve

or

step 1 – pm procedure design: doing the effective things

step 2 – pm procedure scheduling: efficient use of people and resources

step 3 – pm lubrication engineering

step 4 – pm training: back on the chain gang

step 5 – pm program management plan

step 6 – communicate, communicate, communicate

answer; standing committee;