Unlevered firm is more valuable by the amount of the debt

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Reference no: EM131020428

1. If the rate goes down, present value goes down.

2. Depreciation creates a tax shield equal to Deprecation times 1 minus the appropriate tax rate.

3. If two firms are identical except one is levered (has debt) and one is unlevered (no debt, the unlevered firm is more valuable by the amount of the debt.

4. Depreciation is not a cash flow.

5. Maximizing profits and NPV/NPW are the same.

True/False. Please provide a brief sentence explanation for each,

Reference no: EM131020428

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