Question
xyz ltd has no debt, a market value of 200 million and a cost of equity of 12 percent. i) In modigliani and miller (MM)
xyz ltd has no debt, a market value of 200 million and a cost of equity of 12 percent.
i) In modigliani and miller (MM) world with no taxes, what happen to the value of xyz ltd as its financial leverage is increased?
ii)In an MM world with no taxes, what happens to XYZ ltd's cost of equity and WACC as its financial leverage is increased?
iii) In there are corporate taxes, what happen to the value of XYZ LTd and its WACC as its financial leverage is increase?
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Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
9th Edition
73530700, 978-0073530703
