Reference no: EM131051790
General forge and foundry Company has two divisions: one is very risky, and the other has significantly less risk. the company uses its investors' overall required rate of return to evaluate projects. it is most likely that the firm will.
A. Risker over time, and its value will decrease
B. Risker over time, and its value will increase
C. Less risky over time and its value will increase
D. Less risky over time and its value will decrease
Which of the following statements is correct?
A. A firm's WACC should decrease if its tax rate increases, but the yield to maturity of its noncallable bonds remains the same and all other factors are held constant
B. The market value of a firm's debt and equity will continuously change throughtout the day, but the book value of debt and equity tends to stay more stable over time. Consequently, the firm should use the book-value weight to define its optimal capital structure.
C. A firm's after-tax cost of preferred stock may be significantly less than its before-tax cost, because issuing preferred stock dividends creates a tax shelter.
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Yield to maturity of its noncallable bonds remains
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