ACF Final Exam Fully Solved 2023/2024.
If we use a single cost of capital to evaluate projects through the organization, what happens to risky and safer projects? - correct answer For riskier projects, you overvalue them and the firm because the risk isn't comparable and vice versa for safer projects When comparing across firms, how can we compare risk? - correct answer We have to use Ra or beta_a of projects with similar assets R_a comparison EQ - correct answer (D/A) x R_d + (E/A) * R_E How does the unlevered value of a firm compare to levered in perfect markets? - correct answer V_l = V_u How does the unlevered value of a firm compare to levered if the only imperfection is taxes? - correct answer V_l = V_u + PV(ITS) [PV(ITS) = t* D if debt is permanent] Valuation Assumptions for using WACC - correct answer 1) The project has average risk so that the WACC of the project = the WACC of the firm
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- Subido en
- 6 de febrero de 2024
- Número de páginas
- 6
- Escrito en
- 2023/2024
- Tipo
- Examen
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- Preguntas y respuestas
