The interest tas shield has no valee rm elects an all-equity capinal structure A) Iand 1I only n) I and IV only L, IIL, and IV D) W. IIt, and IV only L, 11, and IV only 2. Marley's is an unlevered irm with a total market value of $220,000 and 5,000 shares of stock outstanding. The firm has expected EBIT of $10,000. The firm is considering a bond issue of $88,000 with an attached interest rate of 5,9 percent. The bond proceeds will be used to repurchase shares Assume a 20 percent tax rate. What will be the price per share if Marley announces the repurchase? A) $44.00 ) $32.77 C) $47.52 D) $61.60 3. Delta Mills and Franklin Mills are identical firms except for their capital structures. Delta is an unlevered firm with $680,000 of equity. Franklin is a levered firm. Both Delta and Franklin have an expected EBIT of $84,000. Delta Mills has aWACC than Franklin Mills and afirm value compared to Franklin. A) higher; higher B) lower; higher C) higher, lower D) lower; lower 4. The Border Crossing has no debt and a cost of capital of 12.2 percent. The shareholders would pret to earn rate of return of 16.4 percent. What debt-equity ratio will be required to meet the shareholder's preference if the firm projects a 20% tax rate and can borrow at 62 percent? A) 67% B) 88% C) 54% D) 7096 Which one of these statements is correct for a levered firm? A) An increase in tax rates will decrease the value of the firm. B) To obtain its maximum value, a firm should select an all-equity capital structure. C) The value of a firm is maximized when its cost of capital is also maximized. D) The optimal level of debt for a firm results in the value of that firm being maximized