Operating cash flows of combining firms results

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Reference no: EM132046011

1. Suppose an investor is willing to pay $ 23000 today to receive 50,000 in 7 years from today. What is the discount rate ?

2. "The imperfect correlation between the operating cash flows of the combining firms results in decreases to the value of pre-merger debt to the benefits of the shareholders." True or false?

3. "If there is a coinsurance effect among assets in place and potential projects within the firm, the optimal use of debt for the firm may be higher than the sum of the individual project debt capacities." True or false?

4. "Holding other factors constant, a lower financial leverage increases the beta of the common stock." True or false?

Reference no: EM132046011

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