1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
crimeas [40]
3 years ago
10

MM Proposition II with taxes: Group of answer choices explains how a firm's WACC increases with the use of financial leverage. r

eveals how utilizing the tax shield on debt causes an increase in the value of a firm. supports the argument that business risk is determined by the capital structure employed by a firm. supports the argument that the cost of equity decreases as the debt-equity ratio increases. reaches the final conclusion that the capital structure decision is irrelevant to the value of a firm.
Business
1 answer:
schepotkina [342]3 years ago
4 0

Answer:

explains how a firm's WACC increases with the use of financial leverage.

Explanation:

According to the MM Proposition II with taxes, the cost of equity rises with the increases use of debt in the capital structure of a firm.  

r_{e} = r_{o} +( r_{o}  - r_{d} ) × \frac{D}{E}

As cost of equity increases, the firm's WACC increases also

The  MM Proposition I with taxes reveals how utilizing the tax shield on debt causes an increase in the value of a firm

You might be interested in
An outside supplier offers to provide Factor with all the units it needs at $44.45 per unit. If Factor buys from the supplier, t
Anvisha [2.4K]

Answer:

Factor must opt to agree as well as purchase the deal from the provider. A further explanation is provided below.

Explanation:

The given problem seems to be incomplete. Find the attachment of the complete question below.

Given:

Direct material,

= $8.70  

Direct labor,

= 24.70  

Overhead,

= 43.50

Now,

If the offer is accepted, the cost per unit will be:

= 44.45 + (43.50\times 70 \ percentage)

= 44.45 + 30.45

= 74.90 ($)

Thus the above is the correct answer.

6 0
3 years ago
When Glenn is thirsty, he always buys a Coke. Like many consumers, Glenn engages in considerable alternative evaluation when buy
Alecsey [184]

Answer:

False

Explanation:

Buying coke by Glenn is an habit because he does not have to think before doing it. He does not even try to consider alternatives which could be as a result of his total satisfaction from coke. Habitual decisions need little to no conscious effort (reasoning) to make.

Cheers.

3 0
3 years ago
Which of the following items is not considered evidence in determining if a valuation allowance is necessary? A. A cumulative bo
tatyana61 [14]

Answer:

Management can implement a tax strategy to create future taxable income, but it will be detrimental to the future profitability of the company.- D.

8 0
3 years ago
The international zoological club publishes a monthly magazine for zoology enthusiasts. members are required to pay an initial f
Ainat [17]
The answer is locking in customers
4 0
3 years ago
You are evaluating shares in Honeywell International (HON). They currently pay an annual dividend of $4.00 per share this year a
xxTIMURxx [149]

Answer:

$84

Explanation:

Calculation for what is the value of HON shares

Using this formula

Value of HON shares=(Expected dividend next year)/(Discount rate -Growth rate of dividend)

Let plug in the formula

Value of HON shares= 4(1+.05)/(.10-.05)

Value of HON shares= (4.2/ .05)

Value of HON shares= $84

Therefore the Value of HON shares will be $84

7 0
3 years ago
Other questions:
  • Candela Company has retained earnings of $500,000, common stock of $400,000, and total common stockholders’ equity of $1,200,000
    7·1 answer
  • Explain the art of negotiating and an example to go with. :) ( A situation within very sophisticated work, mhm.)
    13·1 answer
  • Wallendo Corporation issued 5,000 shares of its $1 par value common stock as a stock dividend when the shares were selling for $
    8·1 answer
  • 8. A major electronics firm holds various committee meetings to improve employee morale. However, upper management discovers tha
    14·2 answers
  • This revenue model provides professional services on a time and materials contract. a. utility and usage revenue model b. franch
    15·2 answers
  • Debt is frequently incurred when plant assets are acquired. For example, debt may be incurred on the purchase of plant assets. D
    10·1 answer
  • Milton Industries expects free cash flow of $5 million each year. Milton's corporate tax rate is 35%, and its unlevered cost of
    9·1 answer
  • An October sales forecast projects that 7,000 units are going to be sold at a price of $11.50 per unit. The desired ending inven
    6·1 answer
  • A newspaper story discussing high profits and low unemployment indicates a strong economy
    15·1 answer
  • Effective project teams have a results orientation; each person has a strong commitment to accomplishing the project objective .
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!