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The companies split the stock to increase the prices of stock and make investors rich. O True O False Homemade leverage is: ON The incurrence
The companies split the stock to increase the prices of stock and make investors rich. O True O False Homemade leverage is: ON The incurrence of debt by a corporation in order to pay dividends to shareholders. O Homemade leverage does, however, allow an investor to undo changes to a company's cost of capital that they do not agree with OCThe term used to describe the capital structure of a levered firm. Oo. The use of personal borrowing to alter an individual's exposure to financial leverage. 1 points Dividend policy is ------when there are no taxes or other imperfections because shareholders can effectively undo the firm's dividen strategy. OA Irrelevant OB Relevant OC. Sometime relevant sometimes irrelevant. OD. None of these Question y 5 points Seve Arower Disney land expects its EBIT to be $39700 a year forever. Currently, the firm has no debt. The cost of equity is 13.8 percent, and the tax rate is 39 percent. The company is in the process of issuing $2.2 million worth of bonds at par that carry an annual coupon of 6 percent. What is the unlevered value of the firm? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac) 5 points Save Antwer General motors is an all-equity firm with 42,500 shares of stock outstanding. The company is considering the issue of $290,000 in debt at an interest rate of 8 percent and using the proceeds to repurchase stock. Under the new capital structure, there would be 26,000 shares of stock outstanding. Ignore taxes. What is the break-even EBIT between the two plans? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mach Stock price always reacts to the unanticipated changes in the dividend. As it has no effect on stock price. O True O False
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