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reduce the interest rate on debt
If there is possibility of bankruptcy, then interest rate on debt increases
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Question 29 4 points Save Answer Which of the following is NOT an effect of the...
s Question 14 of 29 Question 14 3 points Save an Which of the following statements...
s Question 14 of 29 Question 14 3 points Save an Which of the following statements is CORRECT? Most rapidly growing companies have positive free cash flows because cash flows from existing operations generally exceeded purchases and changes to net perting working capital Changes in working capital have no effect on free cash flow. Changes in fixed asset purchases have no effect on free cash flow Free cash flow from the annual financial statement is an indication of cash valable...
QUESTION 4 points Save Answer The ultimate owner(s) of an ongoing corporation are a. the federal...
QUESTION 4 points Save Answer The ultimate owner(s) of an ongoing corporation are a. the federal government b. the debt holders. C. the equity holders. O d. the executive staff of the corporation. QUESTION 2 4 points Save Answer What is the most appropriate financial goal for the management of a firm? a. Maximize shareholder wealth b. Maximize net income or earnings O c. Maximize sales revenue o d. Minimize expenses QUESTION 3 4 points Save Answer If you only...
QUESTION 53 6.66 points Save Answer Which of the following is not a determinant of the...
QUESTION 53 6.66 points Save Answer Which of the following is not a determinant of the long-run level of real GDP? O a. available stock of human capital. O b. available technology O c. the price level. O d. the amount of capital used by firms. QUESTION 54 6.66 points Save Answer When households find themselves holding too much money, they respond by O a. purchasing interest-earning financial assets and interest rates fall. O b. holding the extra money and...
1 points Save Answer QUESTION 29 Which of the following are externalities (to drivers) of the...
1 points Save Answer QUESTION 29 Which of the following are externalities (to drivers) of the number of miles they drive? a. wear and tear on highways D. the probability of getting in an accident involving another driver C. the length of time it takes the average driver to get from point A to Point B d. A and above QUESTION 30 1 points Save Answer Given multiple sources for a uniformly mixed air pollutant where the optimal level of...
Question 7 (1 point) The current value of a firm is 467,000 dollars and it is...
Question 7 (1 point) The current value of a firm is 467,000 dollars and it is 100% equity financed. The firm is considering restructuring so that it is 60% debt financed. If the firm's corporate tax rate is 0.2, what will be the new value of the firm under the MM theory with corporate taxes but no possibility of bankruptcy. Your Answer: Answer Question 8 (1 point) The current value of a firm is 95.000 dollars and it is 100%...
Respecfully--Please answer all if you are willing to help. This is over MM propositions anf optimal...
Respecfully--Please answer all if you are willing to help. This is
over MM propositions anf optimal capital structure theories
QUESTION 1 With perfect capital markets, because different choices of capital structure offer a benefit to investors, the capital structure affects the value of a firm. True False QUESTION 2 Under the assumptions of Modigliani and Miller, a firm's value does not depend on the fraction of its financing that it raises from debt holders vs. equity holders. True False QUESTION...
correct answer ( trade off theory - market leverage) (a decision to reduce the likelihood of...
correct answer
( trade off theory - market leverage) (a decision to reduce the
likelihood of financial distress by retirement of debt means that
existing debt is acquired at market value, and that the resulting
decrease in interest tax shields is based on the market value of
the retired debt. Similarly, a decision to increase interest tax
shields by increasing debt requires that new debt be issued at
current market prices.)
I don't understand what that means
thanks a lot...
Question 24 (4 points) Good Time Company is a regional chain department store. It will remain...
Question 24 (4 points) Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 percent and the probability of a recession is 40 percent. It is projected that the company will generate a total cash flow of $250 million in a boom year and $100 million in a recession. The company's required debt payment at the end of the year is $ 150 million....
QUESTION 25 2 points Save Answer Which would you prefer? Option X: $200 in five years...
QUESTION 25 2 points Save Answer Which would you prefer? Option X: $200 in five years time if the discount rate is 2%; or Option Y: $100 in five years time if the discount rate is 2%. O They are both worth $100 in five years time o Option X O Option Y o It depends on the market interest rate QUESTION 26 Save Answer What is a generally accepted value for the social discount rate? 3% 20% 02.00% 0...
please answer both QUESTION 11 Modigliani and Miller's Irrelevance Hypothesis assumes that there are no taxes,...
please answer both
QUESTION 11 Modigliani and Miller's Irrelevance Hypothesis assumes that there are no taxes, no costs of financial distress, no asymmetric information between investors and corporate executives, etc. When those assumptions we relaxed so that they are more consistent with the real world there are corporate taxes and interest payments are tax deductible) and there are costs of financial distress - then which of the following is true? Each firm has an optimal capital structure where firm value...
s Question 14 of 29 Question 14 3 points Save an Which of the following statements is CORRECT? Most rapidly growing companies have positive free cash flows because cash flows from existing operations generally exceeded purchases and changes to net perting working capital Changes in working capital have no effect on free cash flow. Changes in fixed asset purchases have no effect on free cash flow Free cash flow from the annual financial statement is an indication of cash valable...
QUESTION 4 points Save Answer The ultimate owner(s) of an ongoing corporation are a. the federal government b. the debt holders. C. the equity holders. O d. the executive staff of the corporation. QUESTION 2 4 points Save Answer What is the most appropriate financial goal for the management of a firm? a. Maximize shareholder wealth b. Maximize net income or earnings O c. Maximize sales revenue o d. Minimize expenses QUESTION 3 4 points Save Answer If you only...
QUESTION 53 6.66 points Save Answer Which of the following is not a determinant of the long-run level of real GDP? O a. available stock of human capital. O b. available technology O c. the price level. O d. the amount of capital used by firms. QUESTION 54 6.66 points Save Answer When households find themselves holding too much money, they respond by O a. purchasing interest-earning financial assets and interest rates fall. O b. holding the extra money and...
1 points Save Answer QUESTION 29 Which of the following are externalities (to drivers) of the number of miles they drive? a. wear and tear on highways D. the probability of getting in an accident involving another driver C. the length of time it takes the average driver to get from point A to Point B d. A and above QUESTION 30 1 points Save Answer Given multiple sources for a uniformly mixed air pollutant where the optimal level of...
Question 7 (1 point) The current value of a firm is 467,000 dollars and it is 100% equity financed. The firm is considering restructuring so that it is 60% debt financed. If the firm's corporate tax rate is 0.2, what will be the new value of the firm under the MM theory with corporate taxes but no possibility of bankruptcy. Your Answer: Answer Question 8 (1 point) The current value of a firm is 95.000 dollars and it is 100%...
Respecfully--Please answer all if you are willing to help. This is
over MM propositions anf optimal capital structure theories
QUESTION 1 With perfect capital markets, because different choices of capital structure offer a benefit to investors, the capital structure affects the value of a firm. True False QUESTION 2 Under the assumptions of Modigliani and Miller, a firm's value does not depend on the fraction of its financing that it raises from debt holders vs. equity holders. True False QUESTION...
correct answer
( trade off theory - market leverage) (a decision to reduce the
likelihood of financial distress by retirement of debt means that
existing debt is acquired at market value, and that the resulting
decrease in interest tax shields is based on the market value of
the retired debt. Similarly, a decision to increase interest tax
shields by increasing debt requires that new debt be issued at
current market prices.)
I don't understand what that means
thanks a lot...
Question 24 (4 points) Good Time Company is a regional chain department store. It will remain in business for one more year. The probability of a boom year is 60 percent and the probability of a recession is 40 percent. It is projected that the company will generate a total cash flow of $250 million in a boom year and $100 million in a recession. The company's required debt payment at the end of the year is $ 150 million....
QUESTION 25 2 points Save Answer Which would you prefer? Option X: $200 in five years time if the discount rate is 2%; or Option Y: $100 in five years time if the discount rate is 2%. O They are both worth $100 in five years time o Option X O Option Y o It depends on the market interest rate QUESTION 26 Save Answer What is a generally accepted value for the social discount rate? 3% 20% 02.00% 0...
please answer both
QUESTION 11 Modigliani and Miller's Irrelevance Hypothesis assumes that there are no taxes, no costs of financial distress, no asymmetric information between investors and corporate executives, etc. When those assumptions we relaxed so that they are more consistent with the real world there are corporate taxes and interest payments are tax deductible) and there are costs of financial distress - then which of the following is true? Each firm has an optimal capital structure where firm value...
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