According to the static theory of capital structure

Assignment Help Financial Management

Reference no: EM132028935

1. According to the static theory of capital structure, a firm borrows up to which one of the following points?

a. points where the firm is financed totally with debt.

b. point where an additional dollar of debt would have a benefit exactly equal to its cost.

c. point where WACC equals the debt-equity ratio

d. point where the debt-equity ratio equals 1.0

2. According to M&M proposition i with taxes, the value of a levered firm is equal to the value of the unlevered firm plus which one of the following?

a. Current market value of the debt

b. par value of the debt

c. present value of the depreciation tax shield

d. present value of the interest tax shield

Reference no: EM132028935

Questions Cloud

Different borrowers have different risks of bankruptcy : Different borrowers have different risks of bankruptcy, and bankruptcy is costly to lenders.

What is project NPV : A project has annual cash flows of $3,000 for the next 10 years and then $10,500 each year for the following 10 years. what is the project's NPV?

Some of the non-tax related advantages of leasing : what are some of the non-tax related advantages of leasing?

Discount rate suggest about the project risk : What does the 20% discount rate suggest about the project risk?

According to the static theory of capital structure : According to the static theory of capital structure, a firm borrows up to which one of the following points?

The long-term debt accounts of hewlett-packard change : How much did the long-term debt accounts of Hewlett-Packard change?

Industries tends to have the longest cash cycle : Which one of the following industries tends to have the longest cash cycle? Which one of the following is a use of cash?

Which will appear on the statement of cash flows for year : Prepare a schedule of items and their values which will appear on the statement of cash flows for the year ended 12/31/19 (assuming the indirect method)

The average beta of the new stocks added to portfolio : A mutual fund manager has a $20 million portfolio with a beta of 1.80. What should be the average beta of the new stocks added to the portfolio?

User Account

All Pages