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earnstyle [38]
2 years ago
8

The Modigliani and Miller hypothesis suggests that capital structure doesn't matter. All of the following conditions need to be

met for this hypothesis to be true EXCEPT Select one: a. capital structure consists only of stocks and bonds. b. all corporate net income is paid out as dividends. c. corporate income is not subject to taxation. d. securities are traded in perfect or efficient markets.
Business
1 answer:
Dmitriy789 [7]2 years ago
6 0

Answer:

The false statement is letter "B": all corporate net income is paid out as dividends.

Explanation:

The Modigliani-Miller Theorem or M&M is used in financial and economic studies to analyze the value of a firm such as a business or a corporation. The M&M theorem states that a firm's value is based on its ability to earn revenue plus the risk of its underlying assets. This value is independent of the way the company distributes its profits or finances its operations.

In that case, dividends have nothing to do with how the M&M theorem values a business.

You might be interested in
The Safe-T Airbag Company manufactures airbags that are used in automobiles. Fly Motor Company manufactures automobiles in which
melamori03 [73]

Answer:

(A)Requirements Contract

Explanation:

A requirements contract is defined as a contract in which one party agrees to supply as much good/service as desired by the other party. In exchange, the other party implicitly promises that it will obtain its goods or services exclusively from the first party.

Since Fly Motor Company agrees to purchase all the airbags it will need from Safe-T. Airbag company, the requirement of exclusive purchase is satisfied.

6 0
3 years ago
A teacher has decided to take her fifth grade class to a play. The manager of the theater agreed to discount the regular ​$35 pr
MArishka [77]

Answer:

40 students

Explanation:

The cost of the bus is $480

For x students, the cost of each ticket will be 35 - 0.30x

The total cost of the tickets for x students will be x(35 - 0.30x)

To find the number of students that will make the cost per student equal to $33, we solve for x:

<u>480+ x(35 - 0.30x)</u>  =35

                x

480+ x(35 - 0.30x<u>)</u>   = 35x

480 + 35x - 0.30x²   = 35x

480                            = 0.30x²

1,600                          = x²

40                               = x

The cost per student will be $35 if the number of students is 40; it will be less than $35 if the number of students is greater than 40.

8 0
3 years ago
The management of Truelove Corporation is considering a project that would require an initial investment of $321,000 and would l
Art [367]

Answer:

2.6 years

The appropriate response to carry out the project if the payback period is within the acceptable payback period of the company

Explanation:

Payback period calculates the amount of the time it takes to recover the amount invested in a project from its cumulative cash flows.

Payback period = amount invested / cash flow

Cash flows is used in calculating the payback period.

To derive the payback period from net income, add depreciation to net income

$82,000 + $42,000 = $124,000

$321,000 / $124,000 = 2.6 years

I hope my answer helps you

4 0
3 years ago
For each error below, indicate:
patriot [66]

Answer:

1. Inventory account will be affected and assertions of accuracy and valuation will be violated.

2. Assets are overstated and assertion classification is violated.

3. Liability is understated and assertions of accuracy is violated.

4. No impact.

Explanation:

Assertions are certain claims of a business which a business must fulfill in order to make its financial statements reliable. A company has to record the expense when it is incurred in order to provide accuracy in valuation. In the given cases the assertions are violated which impact business accounts.

8 0
2 years ago
Concept: Change in Checking Deposits Show Work Question Help Suppose you deposit ​$1 comma 8001,800 cash into your checking acco
aksik [14]

Answer:

$8,181.81

Explanation:

Data provided in the question:

Amount deposited in the checking account = $1,800

Required reserve ratio = 0.220

Now,

Change in the checking deposits is calculated as:

⇒ ( Amount deposited ) × ( Money multiplier )

also,

Money multiplier = \frac{\textup{1}}{\textup{Reserve ratio}}

or

⇒ Money multiplier = \frac{1}{0.220}

or

⇒ Money multiplier = 4.54

Therefore,

Change in money supply = $1,800 × 4.54

or

⇒ Change in money supply = $8,181.81

3 0
3 years ago
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