A) merger.
B) repurchase program.
C) liquidation.
D) reorganization.
E) divestiture.
G) A) and B)
Correct Answer
verified
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verified
A) $2.209 million
B) $2.005 million
C) $2.312 million
D) $2.012 million
E) $2.108 million
G) A) and B)
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verified
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verified
A) 11.92 percent
B) 12.97 percent
C) 13.08 percent
D) 13.13 percent
E) 13.45 percent
G) A) and E)
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A
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A) will be the same for all companies within the same industry.
B) will remain constant over time unless the company changes its primary operations.
C) will vary over time as taxes and market conditions change.
D) places more emphasis on operations than on financing.
E) is unaffected by changes in the financial markets.
G) C) and D)
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verified
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verified
A) 13.75 percent
B) 14.91 percent
C) 14.25 percent
D) 14.33 percent
E) 14.14 percent
G) C) and D)
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verified
A) 125 shares
B) 100 shares
C) 50 shares
D) 25 shares
E) 75 shares
G) A) and C)
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A) $50,500
B) $68,200
C) $81,400
D) $66,667
E) $72,500
G) B) and D)
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verified
A) privately owned entity; unlevered cost of capital.
B) all-equity company; weighted average cost of capital.
C) levered company; cost of capital for an all-equity company.
D) levered company; weighted average cost of capital.
E) unlevered company; average cost of equity.
G) A) and B)
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verified
A) Prepacks apply only to Chapter 7, not Chapter 11, bankruptcies.
B) Senior management must be replaced prior to exiting a Chapter 11 bankruptcy.
C) A company can only file for Chapter 11 after it becomes totally insolvent.
D) Companies sometimes file for Chapter 11 in an attempt to gain a competitive advantage.
E) Chapter 11 involves the total liquidation of the bankrupt firm.
G) A) and E)
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verified
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verified
A) $5,340,000
B) $4,638,000
C) $5,068,700
D) $4,950,000
E) $5,120,000
G) C) and D)
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verified
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verified
A) weighted average cost of capital decreases as the debt-equity ratio increases.
B) value of a company is inversely related to the amount of leverage used by that company.
C) value of an unlevered company equals the value of a levered company plus the value of the interest tax shield.
D) cost of capital is the same regardless of the mix of debt and equity used.
E) cost of equity increases as the debt-equity ratio decreases.
G) C) and E)
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verified
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verified
A) $1,966,667
B) $2,021,194
C) $1,721,385
D) $2,095,385
E) $1,943,182
G) A) and C)
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C
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A) M&M Proposition I with no tax.
B) M&M Proposition II with no tax.
C) M&M Proposition I with tax.
D) M&M Proposition II with tax.
E) the static theory proposition.
G) A) and E)
Correct Answer
verified
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verified
A) $2,066,667
B) $2,489,111
C) $2,608,515
D) $2,414,141
E) $2,333,333
G) B) and D)
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A) 200
B) 333
C) 400
D) 425
E) 267
G) A) and D)
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verified
A) Homemade leverage
B) M&M Proposition I, no tax
C) M&M Proposition II, no tax
D) Pecking-order theory
E) Static theory of capital structure
G) D) and E)
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verified
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verified
A) $11,647
B) $12,791
C) $13,106
D) $12,200
E) $11,970
G) B) and D)
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A) Exceptionally high depreciation expenses
B) Very low marginal tax rate
C) Substantial tax shields from other sources
D) Low probability of financial distress
E) Minimal taxable income
G) A) and B)
Correct Answer
verified
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verified
A) A company in Chapter 7 bankruptcy is reorganizing its operations such that it can return to being a viable concern.
B) Under a Chapter 7 bankruptcy, a trustee will assume control of the company's assets until those assets can be liquidated.
C) Chapter 7 bankruptcies are always involuntary on the part of the firm.
D) Under a Chapter 7 bankruptcy, the claims of creditors are paid prior to the administrative costs of the bankruptcy.
E) Chapter 7 bankruptcy allows a firm to restructure its equity such that new shares of stock can be issued.
G) C) and D)
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B
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A) 13.70 percent
B) 13.85 percent
C) 14.01 percent
D) 14.26 percent
E) 14.08 percent
G) C) and D)
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Correct Answer
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