Dottie had a shop in which she made wind chimes for her business. it burned to the ground after a stray skyrocket from a nearby neighborhood landed on the roof. the shop was 5 years old and cost $50,000 to construct. it showed up on the books as being worth $42,500 after depreciation. however, the replacement cost would be $55,000. which of the following statements is most likely to be true of dottie’s payout from the insurance company?

a. they will not pay because the fire was started by someone else.
b. they will pay $42,500 because that is the actual cash value of the building.
c. dottie will have to find who set off the firework and sue them in order to get paid.
d. they will pay $55,000 because in general most property insurance policies provide replacement value coverage.

Pennewell publishing inc. (pp) is a zero growth company. it currently has zero debt and its earnings before interest and taxes (ebit) are $80,000. pp's current cost of equity is 10%, and its tax rate is 40%. the firm has 10,000 shares of common stock outstanding selling at a price per share of $48.00. refer to the data for pennewell publishing inc. (pp). pp is considering changing its capital structure to one with 30% debt and 70% equity, based on market values. the debt would have an interest rate of 8%. the new funds would be used to repurchase stock. it is estimated that the increase in risk resulting from the added leverage would cause the required rate of return on equity to rise to 12%. if this plan were carried out, what would be pp's new value of operations? a. $484,359 b. $521,173 c. $584,653 d. $560,748 e. $487,805