User Account

All Pages

Which would occur if a firm is financed entirely with equity

Assignment Help Financial Accounting
Reference no: EM132795914

problem 1: If a firm is financed entirely with equity and a small amount of debt is substituted for equity in the capital structure, which of the following would occur?

a. WACC would decrease, because equity costs decrease as debt is added
b. WACC would increase, because overall risk is increased slightly and debt costs more than equity
c. WACC would increase, because the market rewards organizations that can remain debt-free
d. WACC would decrease while the debt ratio would be low and the coverage ratio high

Reference no: EM132795914

Questions Cloud

Which is true about the private investors : Empirical research finds which of the factors is positively correlated with the liquidity discount of the restricted stocks? Which is true about the private
What is the net asset value per share of the fund : Larry's Advisor charged him 4% commissions to buy LMN Balanced Mutual fund. So far the fund has sold 2 million units. The expenses of the fund
Explain the impact of any relevant political issues : In your initial post, briefly describe three policies or programs you are considering as the subject of the Final Paper, and explain the impact of any relevant.
What is the current market price of the bonds : What is the current market price (intrinsic value) of the bonds? Round the answer to two decimal places.
Which would occur if a firm is financed entirely with equity : If a firm is financed entirely with equity and a small amount of debt is substituted for equity in the capital structure, which of the following would occur?
Investment proportions of the complete portfolio : Suppose you manage a risky portfolio with an expected rate of return of 10% and a standard deviation of 20%. The T-bill rate is 2%.
Develop a written case study of the program : You will view several episodes of a crime-related television program, logging information about your observations and using that data to develop a written case.
What is the estimated warranty liability at the end : The company estimates that the warranty costs related to dollar sales are 2% for the first year of warranty. What is the estimated warranty liability at the end
What are the issues and possible solutions : How has new media complicated the selection of an impartial jury in a high-profile trial? When information is as accessible as smartphones can make it.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Will be willing to pay higher price for the stock than jane

Ian Malcolm,Based on the relationship between risk and return, will you be willing to pay a higher price for the stock than Jane? Explain.

  Determine implications of introducing non-statutory

Determine benefits and implications of introducing non-statutory profit measures and other value added statements into the annual report of listed entities.

  Discuss the waitress and person pumping gas

What are some alternative explanations for the behaviors of the waitress and person pumping gas. Why do we typically not assume

  What the estimated goodwill is

Assuming that excess earnings are expected to continue for 8 years, and ignoring the time value of money, estimated goodwill is

  Explain stock valuation techniques

Explain why most investors prefer to hold a diversified portfolio of securities as opposed to placing all of their wealth in a single asset.

  What are the total equivalent units for direct materials

The Bottling Department of Rocky Springs Beverage Company had 2,400 ounces in beginning work in process inventory (50% complete). During the period, 40,300 ounces were completed. The ending work in process inventory was 2,000 ounces (60% complete). W..

  What is the margin of safety in units and in sales revenue

The selling price is R16 per custom pair of baby shoes. What is the margin of safety in units and in sales revenue if 13 000 baby pairs of shoes are sold?

  Explain analyst uses to adapt for the analysis

Two popular methods of financial statement analysis are time series analysis and periodic analysis. Explain the difference between these two methods.

  What can tell about the firm

The firm had Sales of $50,000 last year and $80,000 this year. Accounts Receivables were $2,500 last year and are $4,500 this year. What can you tell about firm

  Find the required rate of return

Compute What is the required rate of return on AA's stock? Do not round intermediate calculations. Round your answer to one decimal place.

  Prepare the journal entries for stick related to ownership

Prepare the journal entries for 20X2 for Stick related to its ownership of Pretzel's bonds. how do you get the market rate for this question?

  The capital investment under consideration

Suppose your company needs to raise $10 million to construct a a new manufacturing facility. You are the Treasurer and have recommended to the CFO that the company raise $10 million by selling 30-year, $1,000 par value bonds with a coupon rate of 6%...

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd