Problem
Evaluate whether the $30 million that Chairman Gerald Stone offered is appropriate. Use 5% as the market risk premium in calculating the expected return on equity. Also apply 30% as an illiquidity discount in estimating the equity value, considering that Industrial Accessories is not publicly traded in the market. Assume 25% as the target debt to total capital ratio for the firm on a market value basis.
From Ivey, Richard Ivey School of Business: "Industrial Accessories Ltd."