FIN 516

FINANCE 516 WEEK 8 FINAL EXAM

1. (TCO B) Which of the following statements concerning the MM extension with growth is NOT CORRECT? (a) The tax shields should be discounted at the unlevered cost of equity.] (b) The value of a growing tax shield is greater than the value of a constant tax shield. (c) For a given D/S, the levered cost of equity is greater than the levered cost of equity under MM’s original (with tax) assumptions. (d) For a given D/S, the WACC is greater than the WACC under MM’s original (with tax) assumptio...

FIN 516 Week 8 Final Exam Question 1.1. (TCO B) Which of the following statements concerning the MM extension with growth is not correct? (a) The tax shields should be discounted at the unlevered cost of equity. (b) The value of a growing tax shield is greater than the value of a constant tax shield. (c) For a given D/S, the levered cost of equity is greater than the levered cost of equity under MM’s original (with tax) assumptions. (d) For a given D/S, the WACC is greater than the WACC unde...