Creditors of a company or the company itself file under Chapter 7 of the US bankruptcy code when they intend to reorganize the company and expect it to continue business once the bankruptcy proceedings end. True O False According to the economic theories we discussed, there are both agency costs and benefits to leverage. True O False We are working on a project to build a new product for our customers. The new product will cut into sales of existing products. When analyzing the NPV of the project, which of the following should we not consider because they represent sunk costs? (Check all that apply) Allocated overhead such as corporate management that will spend time on the project Previously conducted research and development work to get the project to this point New employees hired to work on the project Cannibalization of our existing produces The marginal tax rate of the corporation Space we provide new employees working on the project Balance sheet items that are part of working capital considerations, include: Choose all that apply) Long-term debt due in five years Inventory Deprectiation Accounts Payable Accounts Receivable The main economic argument behind Modigliani and Miller I is: There are no economic arguments behind Modigliani and Miller I the outcome is simply a mathematical formula Since there are no taxes, investors receive a tax free rate of return Investors can replicate any desired capital structure by borrowing funds and investing in the unlevered firm so the levered firm provides no additional value Since capital markets are perfect, investors always receive a fair return for their money