The value of a firm is maximized when the
A: cost of equity is maximized.
B: tax rate is zero.
C: levered cost of capital is maximized.
D: weighted average cost of capital is minimized.
A: cost of equity is maximized.
B: tax rate is zero.
C: levered cost of capital is maximized.
D: weighted average cost of capital is minimized.
举一反三
- The average of a firm's cost of equity and after tax cost of debt that is weighted based on the firm's capital structure is called the: A: reward to risk ratio B: weighted capital gains rate C: structured cost of capital D: weighted average cost of capital
- A capital investment’s internal rate of return( ). A: Must exceed the cost of capital in order for the firm to accept the investment. B: C: Statements c and d are correct. D: Changes when the cost of capital changes. E: Is similar to the yield to maturity on a bon F: Is equal to the annual net cash flows divided by one half of the project’s cost when the cash flows are an annuity.
- A capital investment’s internal rate of return ( ) A: Changes when the cost of capital changes. B: Must exceed the cost of capital in order for the firm to accept the investment. C: Statements c and d are correct. D: Is similar to the yield to maturity on a bond. E: Is equal to the annual net cash flows divided by one half of the project’s cost when the cash flows are an annuity.
- Company A’s capital employed and its adjusted profit is $800m and $500m respectively. Its target capital structure is 75% equity 25% debt. The cost of equity is 18% and pre-tax cost of debt is 12%. What is the value of EVA using Economic Value Added approach?
- The capital structure that maximizes the value of a firm also: A: minimizes financial distress costs. B: minimizes the cost of capital. C: maximizesthe present value of the tax shield on debt. D: maximizes the value of the debt.