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 if you ignore taxes?
A) $4.8 million
B) $5.1 million
C) $5.4 million
D) $5.7 million
E) $6.0 million

Question

Quizplus · Accepted Answer

The firm is borrowing $1.5 million to buy 25% of the shares, implying the total value of the firm is $1.5 million / 0.25 = $6.0 million.

You Own 25% of Unique Vacations,Inc