Consider the Modigliani and Miller (M&M) tradeoff theory of…

Consider the Modigliani and Miller (M&M) tradeoff theory of capital structure. Assume there are taxes and bankruptcy costs. Which of the following statements is / are correct? I. Firm value always increases as more debt is addedII. Firm value stays constant as more debt is addedIII. WACC always decreases as more debt is addedIV. WACC always increases as more debt is addedV. WACC stays constant as more debt is added

Los Pollos Hermanos is considering Projects S and L, whose c…

Los Pollos Hermanos is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable.  Your boss, Gus Fring, asks you which project will have the higher NPV. What do you respond?   Year                           0                1                2                3                4     CFS                        -$1,100        $600          $500          $300         $100 CFL                        -$1,100        $100          $300          $500         $600