Question
Given the following information about the FIN454 Company: the firm that has no debt and has a market value of $100 million and a cost
Given the following information about the FIN454 Company: the firm that has no debt and has a market value of $100 million and a cost of equity of 11%. Using the Miller-Modigliani model, a. What happens to the value of the firm as the leverage is changed? (Assume no taxes) b. What happens to the cost of capital as the leverage is changed? (Assume no taxes) c. How would your answers to (a) and (b) change if there are taxes?
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The Certified Lease And Finance Professionals Handbook
Authors: Deborah Reuben, Certified Lease & Finance Professionals, Equipment Finance Industry Experts
6th Edition
171743388X, 978-1717433886
