Problem:
You own 25% of Unique Vacations, Inc. You have decided to retire and want to sell your shares in this closely held, all equity firm. The other shareholders have agreed to have the firm borrow $1.5 million to purchase your 1,000 shares of stock.
What is the total value of this firm today under Modigliani & Miller (M&M) theorem if you
ignore taxes?
A. $4.8 million
B. $5.1 million
C. $5.4 million
D. $5.7 million
E. $6.0 million
F. None of the above
Summary of question:
This question basically belongs to Finance as well as it explains about calculation of the total value of shares of stock of a firm under the Modigliani & Miller Model or theorem where taxes are ignored.