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