Miller and modigliani - Study guides, Class notes & Summaries

All of the class notes for Module 10: Capital Structure in BUSI 7110 - Financial Analysis. These notes cover weeks 12-13 in class. The notes are divided up by each lecture and the major topics covered include (1) Optimal Capital Structure, (2) Financial Leverage, (3) Miller & Modigliani Propositions, and (4) Costs of Financial Distress. Important quotes from the professor are included in quotations and any formulas are highlighted in yellow for easy reference.

The firm's capital structure refers to: - Answers-D. the mix of debt and equity used to finance the firm's assets The proposition that the cost of equity is a positive linear function of capital structure is called: - Answers-C. MM Proposition II The Modigliani-Miller Proposition without taxes states: - Answers-A. a firm cannot change the total value of its outstanding securities by changing its capital structure proportions MM Proposition I without taxes is used to illustrate" - Ans...

CFA Level 2 Exam 115 Questions with Answers 2023 FCFF (using EBITDA) - CORRECT ANSWER FCFF = EBIDTA(1-T) + DEP(T) - Finv - Winv Converting FIFO to LIFO COGS - CORRECT ANSWER FIFO COGS = LIFO COGS - (End LIFO Reserve - Beg LIFO reserve) Engle- Granger Test - CORRECT ANSWER Test whether 2 variables are cointegrated. Regress 1 data series against the other and check residuals for unit root. Steady State of Growth Formula - CORRECT ANSWER growth = Growth Rate TFP/1-(Labor cost in total...

Modigliani and Miller (M&M) - correct answersThe case of perfect markets (mainly no taxes and no costs of financial distress A Firm cannot change the total value of its securities by splitting its cash flows into different streams. Therefore financing decisions do no matter in perfect market and MARKET VALUE OF THE FIRMS IS INDEPENDENT OF ITS CAPITAL STRUCTURE - correct answersTRUE When a company issues debt, what source of risk is created? - correct answersFinancial risk and that's bo...

TEST BANK For Intermediate Financial Management, 12th Edition By Eugene. Brigham, Phillip R. Daves. Chapter 1-32. Questions, Answers and Rationale. Part I: FUNDAMENTAL CONCEPTS OF CORPORATE FINANCE. 1. An Overview of Financial Management and the Financial Environment. Web Extension 1A: An Overview of Derivatives. Web Extension 1B: An Overview of Financial Institutions. 2. Risk and Return: Part I. Web Extension 2A: Continuous Probability Distributions. Web Extension 2B: Estimating Beta with a Fin...

Which will be larger: accrual taxes payable or accounting income tax expense Accounting tax expense will be higher; actual taxes based on IRS rules will be lower Which financial ratios measure "efficiency"? Asset turnover and Fixed Asset turnover Which ratio is the best measure of a firm's ability to pay bills? Quick Ratio Which decision requires using subjective estimates? Economic life of a new asset What is the yield to maturity on a bond? The return earned...

Which will be larger: accrual taxes payable or accounting income tax expense - Correct answer-Accounting tax expense will be higher; actual taxes based on IRS rules will be lower Which financial ratios measure "efficiency"? - Correct answer-Asset turnover and Fixed Asset turnover Which ratio is the best measure of a firm's ability to pay bills? - Correct answer-Quick Ratio Which decision requires using subjective estimates? - Correct answer-Economic life of a new asset What is the yi...

Present Value PV = CF/(1+r)^n where CF = cash flow in future period r = interest rate n = number of periods Net Present Value NPV = - I + CF/(1+r)^n + ... + where I = initial investment PV of Perpetuity PV = C/R where: R= interest rate C= cash flow PV of Growing Perpetuity PV = C/(R-G) where: G= growth PV of Annuity PV = (C/r) [ 1- (1/(1+R)^N)] where R = interest rate N = years PV of growing Annuity PV = (C/(R-G)) (1-((1+G)/(1+R))^N) ...

A company made $10 million in revenue, recorded $2 million in net income, and paid $750,000 in dividends last year. What was the company's pay out ratio last year? Select one: a. 20.0% b. 2.7% c. 37.5% d. 7.5% Question 2 Correct Marked out of 1.00 Flag question Question text This study source was downloaded by from CourseH on 07-17-2022 14:01:19 GMT -05:00 . In which of the following situations would a shareholder prefer to receive stock dividends as opposed to cash dividends? ...

Summary corporate financial management including figures