DEVRY FIN 516 Week 8 Final Exam Guide
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FIN 516 Week 8 Final Exam Guide
Question 1.1 . ( TCO B ) Which of the following statements concerning the MM extension with growth is not correct ? ( a ) The tax shields should be discounted at the unlevered cost of equity . ( b ) The value of a growing tax shield is greater than the value of a constant tax shield . ( c ) For a given D / S , the levered cost of equity is greater than the levered cost of equity under MM ’ s original ( with tax ) assumptions . ( d ) For a given D / S , the WACC is greater than the WACC under MM ’ s original ( with tax ) assumptions . ( e ) The total value of the firm is independent of the amount of debt it uses .
Question 2.2 . ( TCO D ) Which of the following statements is most correct ? ( a ) In a private placement , securities are sold to private ( individual ) investors rather than to institutions . ( b ) Private placements occur most frequently with stocks , but bonds can also be sold