1. Explain how each of the following affects corporate governance and whether the impact is positive or negative.
a. Block ownership
b. Greenmail
c. Stock options as part of compensation
d. High level of debt
e. Board of Directors comprised by majority of outsiders and compensating based in part on performance of company.
2. ABC Ltd has operating revenue of $55,000 and expenses (fixed) of $5,000 and (variable) $12,000 p.a. If the required rate of return of equity holders is 8%, and the company tax rate is 30%, what is the value of ABC Ltd?
a. $376,250
b. $332,500
c. $481,250
d. $475,000