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

Consider the Modigliani and Miller (M&M) theory of capital structure. Assume there are NO taxes and NO 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

The following data (in millions) apply to Hill’s Hiking Equi…

The following data (in millions) apply to Hill’s Hiking Equipment:                                     Value of operations                       $20,000                   Short-term investments                 $1,000                   Debt                                              $6,000                   Number of shares                          300   The company plans on distributing $500 million through stock repurchases. Assuming the share repurchase does not signal new information, what will the intrinsic per share stock price be immediately following the repurchase?

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