A firm currently has no debt and its equity has a beta of 1.0.
The risk-free rate is 4% and the market
risk premium is 6%.
The corporate tax rate is 40%.
What is this firm’s r
(e) none of the above
Spartan Corp. has a very small board of directors composed of only 3 people.
The firm is conducting
its annual election to choose these 3 individuals to serve on the board.
Spartan has cumulative voting.
There are 1,000,000 shares outstanding and you own 400,000 of these shares.
You really want your
marketing professor appointed to Spartan's board.
Can you guarantee that she will be elected?
In financing their spending needs in any given year, which of the following is typically the largest/most
important source of funds for U.S. corporations?
In the Marriott case, when Marriott attempts to calculate a discount rate for a new hotel we
recommended that they use:
Modigliani and Miller’s Proposition 1 in a world with no taxes or financial distress costs states that
(a) the total value of a firm’s bonds is independent of capital structure
(b) the total value of the sum of all of a firm’s stock and bonds is independent of capital structure
(c) a firm’s r
is increases when the debt-equity ratio increases
In the Marriott case, we argued that the risk-free interest rate that should enter into any calculation of
a cost of capital should correspond to a Treasury bond
_______________ that is ___________ the project
that is being discounted (i.e., the project for which you are calculating an NPV).