Leverage and capital structure under the new assumptions

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1. If we incorporate Financial Distress or Bankruptcy Costs and also Taxes, then we have altered the fundamental assumptions of Modigliani and Miller. Explain the relationship between leverage and capital structure under the new assumptions.

2. Suppose black sheep broadcasting company is evaluating a proposed capital budgeting project beta that will require an initial investment of 2,225,000 the project is expected to egenerate the folloeing net cash flows.

Reference no: EM132022389

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