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Why should stockholders care about maximizing firm value rather than just the value of the equity? How does financial leverage affect firm value and weighted

  1. Why should stockholders care about maximizing firm value rather than just the value of the equity?
  2. How does financial leverage affect firm value and weighted average cost of capita (WACC) without taxes? With taxes? With Bankruptcy cost?
  3. Explain the tradeoff, signaling, agency cost, and pecking order theoriesof capital structure.
  4. Explain why share repurchases are an alternative to dividends, and why mightinvestors prefer them?

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