Academic studies have estimated that the tax benefit of debt realized by firms is approximately
A) 10% of firm value.
B) a 10% reduction in WACC.
C) a 10% reduction in the cost of debt
D) 10% of debt value.
Answer: A
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FIN303
- Option payoffs: What is the payoff for a put option with a strike price of $20 if the price of the underlying stock at expiration is $18?
- Option payoffs: You have sold a call option on ABC Co. stock with a strike price of $40. You do not intend to make any other transactions before the options expiration date. The current stock price is $20. Which of the following statements best describes your hopes for the stock?
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- RealEstates LLP is considering the construction of a new development of condominiums in downtown Austin, Texas. The site for the new development is currently occupied by an office building owned by the city. The project's profitability will depend largely on the population increase in Austin over the next several years. Rather than buy the site, RealEstates has entered into an agreement with the city to pay $200,000 for the right to purchase the site for $10 million two years from now. The real option embedded in this contract is best described as
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- Which one of the following statements about the sustainable growth rate (SGR) is NOT true?
- Which one of the following statements about the sustainable growth rate (SGR) is NOT true?
- The sustainable growth rate (SGR)
- Firms that achieve higher growth rates without seeking external financing
- Firms that achieve higher growth rates without seeking external financing
- Which one of the following statements is NOT true?
- External funding needed (EFN) is
- In accounting for changes in fixed assets, which one of the following statements is NOT true?
- In accounting for changes in fixed assets, which one of the following statements is NOT true?
- Some weaknesses in financial planning models include:
- In using more sophisticated planning models, which one of the following statements is NOT true?
- In using more sophisticated planning models, which one of the following statements is NOT true?
- Which one of the following statements is NOT true?
- Which statement is NOT true for a firm that is operating at full capacity?
- One statement that is NOT true about more sophisticated financial planning model is that:
- Planning models that are more sophisticated than the percent of sales method have
- Which one of the following statements is NOT true about financial planning models?
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.