Acf capital structure - Study guides, Class notes & Summaries

ACF - Capital Structure Question and answers already passed 2023/2024The Modigliani-Miller theorem in the absence of tax - correct answer A good starting point: When is leverage irrelevant? Start in a 'perfect' world No taxes No market frictions Perfect capital markets: Firms and investors can borrow/lend at the same rate Equal access to all relevant information No transaction costs Firms in distress can be reorganizes without cost Managers act in shareholders' interests MM Pro...

ACF - Capital Structure

ACF - Capital Structure

The Modigliani-Miller theorem in the absence of tax - correct answer A good starting point: When is leverage irrelevant? Start in a 'perfect' world No taxes No market frictions Perfect capital markets: Firms and investors can borrow/lend at the same rate Equal access to all relevant information No transaction costs Firms in distress can be reorganizes without cost Managers act in shareholders' interests MM Proposition I - correct answer MM I without taxes : the value of a firm ...

ACF Final Exam Questions With 100% Correct Answers. T/F WACC formula works for the "AVERAGE RISK" project - answerTrue T/F When calculating WACC for firm, one should only use MARKET values of DEBT and EQUITY - answerTrue T/F Discounting @ WACC assumes debt is rebalanced every period to maintain constant ratio debt to market value of firm - answerTrue T/F Discounting @ WACC assumes that the ratio of the debt supported by a project to the project's value remains UNCHANGED over the proje...