Corporate Finance: A Focused Approach (7th Edition)

Chapter 15

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The value of operations can be affected by capital... more

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The risk that arises due to the normal day-to-day ... more

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The determinants of business risk are:Input ... more

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The sensitivity of EBIT to change in sales is ... more

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The additional risk that arises on the equity ... more

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The use of debt till it reaches an optimal level ... more

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50,000.00 ; A breakeven point is a point at which ... more

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The value of a levered firm will be equal to the ... more

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According to the theory, the value of the firm is ... more

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The MM model with personal and corporate tax ... more

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The sensitivity of changes in the stock prices due... more

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When the managers save their ability to borrow ... more

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The use of debt makes the managers more ... more

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The following theories are supported by empirical ... more

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Capital structure decisions should be made while ... more

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As the leverage increases, first, the cost of debt... more

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11.60 ; Calculate the unlevered beta using the ... more

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Unlevered beta: 1.16Unlevered cost of equity: 11.... more

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10.77% ; Calculate unlevered beta by using the ... more

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Value of equity: $600,000,000Stock price: $80.... more

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The equity can be seen as a call option due to the... more

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In order to increase the value for shareholders, ... more

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The bondholders use bond indenture to restrict the... more

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The following factors influence the maturity ... more

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The sensitivity of changes in the stock prices due... more

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Business risk is the uncertainty of returns on ... more

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The fixed cost that is operating cost for a firm ... more

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Both EBIT and EPS are affected by operating ... more

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Firms with stable sales are less risky and have ... more

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The public companies have higher debt as a part of... more

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The interest expense incurred on a firm debt does ... more

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As the leverage increases, the cost of debt and ... more

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The equity can be seen as a call option due to the... more

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$20,000.00 ; The breakeven quantity is that point ... more

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1.00 ; Beta is the sensitivity of returns on stock... more

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3.60% ; Calculate the cost of equity of unlevered ... more

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The value of a levered firm will be equal to the ... more

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$425,000,000,000.00 ; Calculate the value of debt ... more

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$515,830,000,000.0000 ; Capital structure refers ... more

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$300,000,000.00 ; Capital structure refers to the ... more

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$30.00 ; Capital structure refers to the mixed ... more

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40,000,000.00 ; Calculate the number of shares ... more

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Current WACC: 11.25%Current Value of operations: $... more

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Optimal capital structure at which WACC is ... more

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Capital structure refers to the mixed proportion ... more

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The value is affected by the following:Free cash ... more

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The risk that arises due to normal day-to-day ... more

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ROE U1 at EBIT$1,600: 6.00%ROE L1  at EBIT$1,600: ... more

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The capital structure theory aims at minimizing ... more

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The following theories are supported by empirical ... more

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At 20% debtValue of debt: $153,846,153.80Value of ... more

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