Question
2. Corporate finance is built around the financial balance sheet, where assets are categorized into assets in place and growth assets. Assume that you are
2. Corporate finance is built around the financial balance sheet, where assets are categorized into assets in place and growth assets. Assume that you are investing in a company that derives its value primarily from growth assets. Given the description of growth assets as the value of investments that you expect the firm to make in the future, which of the following would you expect to see in terms of the rest of corporate finance?
a. The firm is funded with a lot of debt and pays little out to its stockholders
b. The firm is funded with primarily equity and pays out large amounts to its stockholders
c. The firm is funded with primarily equity and pays little out to its stockholders
d. The firm is funded with a lot of debt and pays out large amounts to its stockholders.
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