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help help help please Which of the following statements is CORRECT, holding other things constant? The optimal capital structure simultaneously minimizes the cost of debt,
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Which of the following statements is CORRECT, holding other things constant? The optimal capital structure simultaneously minimizes the cost of debt, the cost of equity, and the WACC. If changes in the bankruptcy code make bankruptcy less costly to corporations, then this would likely reduce the debt ratio of the average corporation. An increase in the corporate tax rate is likely to encourage a company to use more debt in its capital structure None of the statements are correct. As a rule, the optimal capital structure is found by determining the debt-equity mix that maximizes expected EPS. A project has an up-front cost of $150,000. All subsequent cash flows are positive. The project's required return is 12 percent and its net present value is -$10,000. Which of the following statements is most correct? The project's internal rate of return equals 12 percent. The project's internal rate of return is less than 12 percent. You need more information to determine whether the internal rate of return is greater than, less than or equal to 12 percent. The project's internal rate of return is greater than 12 percent. I really should have come to class more often. Question 23 (1.34 points) You work for a constant-growth firm that is valued at $500 million. It has a capital structure of 25% debt and 75% equity, and there are no short-term investments. Your firm's current tax rate is 35%, but Congress is expected to pass legislation that will decrease it to 25%. If the firm's capital structure and costs of capital remain constant, what will happen to the firm's WACC? The WACC will decrease. The WACC could increase, decrease, or remain constant. The WACC will increase. I am still waiting to start bowling, The WACC will remain constant Step by Step Solution
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