UMUC FIN 620 Homework 4 Capital Structure and MM Answers
UMUC FIN 620 Homework 4 Capital Structure and MM Answers
BUY HERE⬊
FIN 620 Quiz 4 Capital Structure and MM Answers 2020 (UMUC)
1. Boris Corporation is financed with 0.33 percent debt and the rest equity. It has a leveraged beta of 0.9 and is subject to a 0.5 corporate tax rate. What is Boris's unleveraged beta?
2. Under the US tax code, a high corporate tax rate encourages corporations to _____
3. For the typical firm, debt financing is cheaper than equity financing.
4. As the fraction of debt financing in a firm increases____
5. The optimal Weighted Average Cost of Capital (WACC) does the following?
6. The current value of a firm is 35,000 and it is 100% equity financed. The firm is considering restructuring so that it is 20% debt financed. If the firm's corporate tax rate is 0.6, what will be the new value of the firm under the MM theory without taxes, transactions costs, or the possibility of bankruptcy?
7. The current value of a firm is 440,700 dollars and it is 100% equity financed. The firm is considering restructuring so that it is 30% debt financed. If the firm's corporate tax rate is 0.7, what will be the new value of the firm under the MM theory with corporate taxes but no possibility of bankruptcy.
8. The current value of a firm is 428,700 dollars and it is 100% equity financed. The firm is considering restructuring so that it is 90% debt financed. If the firm's corporate tax rate is 0.8, the typical personal tax rate of an investor in the firm's stock is 0.2, and the typical tax rate for an investor in the firm's debt is 0.5 what will be the new value of the firm under the MM theory with corporate taxes but no possibility of bankruptcy.
9. Which of the following is true?
10. If the personal tax on stock income and the personal tax on debt income both go to zero, the MM theory with personal taxes reduces to the MM theory with only corporate taxes.
Comments
Post a Comment