Miller and modigliani - Study guides, Class notes & Summaries

According to Modigliani and Miller Proposition II, the firm's expected return on assets depends on several factors including the firm's capital structure. T or F - ANSWER-FALSE According to Modigliani and Miller Proposition II, since the expected rate of return on debt is less than the expected rate of return on equity, the weighted average cost of capital declines as more debt is issued. T or F - ANSWER-FALSE Financial leverage increases the expected return and risk of the shareholder. ...

REE 4204 SIRMANS TEST QUESTIONS WITH REVISED ANSWERS Issues in real estate - Answer-1. valuation of property-market value vs the book value, appraised value, depends on expected amount, timing, and risk associated with the asset cash flows 2. NOI-accounting profits vs after tax cash flows -added cash flows from minimizing taxes allow for greater accumulation of wealth since cash flows can be reinvested in other corporate investments g-sooner the cash flow is received the greater its present...

T/F: Modigliani and Miller published theoretical papers that changed the way people thought about financial leverage - ANSWER-True What assumptions underlie the MM and Miller Models? - ANSWER-+Firms can be grouped into homogeneous classes based on business risk. +Investors have identical expectations about firms' future earnings. + There are no transactions costs + No agency or financial distress There are two more assumptions that underlie the MM and Miller Models? - ANSWER-+...

t/f the dividend irrelevance theory proposed by miller and Modigliani says that provided a firm pays at least some dividends, how much it pays does not affect either its cost of capital or its stock price ANSWER: f t/f if investors prefer firms that retain most of their earnings then a firm that wants to maximize its stock price should set a low payout ratio ANSWER: t t/f if a firm adopts a residual distribution policy, distributions are determined as a residual after funding the cap...

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 ...

Real Estate Finance - ANSWERSThe study of the institutions, markets and instruments used to transfer money and credit for the purpose of developing or acquiring real property. Real Property - ANSWERSThe rights, power, and privileges associated with the use of real estate. Real Estate - ANSWERSLand and all fixed immovable improvements on it. Financial Instruments - ANSWERSAre used to transfer money and credit for the purpose of developing and acquiring real property .Environment of Re...

An unlevered firm has a cost of capital of 14% and earnings before interest and taxes of $150,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $700,000 with a 7% annual coupon. The applicable tax rate is 35%. What is the value of the levered firm? - ANSWER-$941,429 Financial leverage impacts the performance of the firm by: - ANSWER-increasing the volatility of the firm's net income. Gail's Dance Studio is currently an all equity fi...

FIN 304 Final exam questions & answers 2023/2024 Modigliani and Miller (M&M) - ANSWER-The case of perfect markets (mainly no taxes and no costs of financial distress A Firm cannot change the total value of its securities by splitting its cash flows into different streams. Therefore financing decisions do no matter in perfect market and MARKET VALUE OF THE FIRMS IS INDEPENDENT OF ITS CAPITAL STRUCTURE - ANSWER-TRUE When a company issues debt, what source of risk is created? - ANSWER-Fina...

Well-structured MAC3702 Assignment 1 (ANSWERS) 2023 - DISTINCTION GUARANTEED . (DETAILED ANSWERS - DISTINCTION GUARANTEED!)...... Question 1 Complete Mark 1.00 out of 1.00 Papraika Limited (also known as “Papraika Stores”) is the largest non-food retailer in South Africa and is listed on theJohannesburg Stock Exchange (JSE). The company is the leading retailer of clothing, home appliances, stationery,cosmetics, accessories and cellular products in Southern Africa with more than 3 000 ret...

MAC3702 Mock Exam (October/November) 2023 100% TRUSTED workings, explanations and solutions. For assistance call or us on +/ 2/ 5/ 4 /7 /7 /9 /5 /4 /0 /1 /3 /2 . QUESTION 1 (25 marks; 30 minutes) MusclePharm Ltd (MusclePharm) was founded in 2005 to develop the most scientifically advanced, clinically aligned and safest range of dietary supplementation possible. MusclePharm is currently financed by a debt to equity ratio of 20 : 80. Management of MusclePharm is considering investing in ...