Paradiso Holidays has expected EBIT of $4,040, an unlevered cost of capital of 22.2% and a tax rate of 21%. The firm also has $2,020 of bonds outstanding with a coupon rate of 4.4%. If the debt is selling at par value, what is the value of this firm assuming all the cash flows are perpetual as in M&M propositions?

A. $19,819.20

B. $12,055.15

C. $14,800.78

There are 30,000 shares outstanding of Edison Inc., with a current market price of $41.07 per share. Edison Inc. is going to issue a small stock dividend of 15.7%. How many new shares will be issued, if Edison Inc. successfully conducts its planned stock dividend?

A. 34,710 shares

B. 4,710 shares

C. 4,900 shares