If MM's proposition II without taxes is true and no bankruptcy risk exists, how much debt will a company prefer if their cost of debt is 6%, cost of equity is 10% and the corporate tax rate is 21%?
A. 0%
B. 100%
C. 35%
D. 21%
Answer: B
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List and briefly discuss the three different kinds of purchases or buy classes made by organizations
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The manager of Hampton, Inc. is trying to decide whether to make or buy a component of the product it sells. Which of the following costs and benefits is not relevant to the decision?
A. Direct labor cost involved in making the component B. Variable manufacturing overhead involved in making the component C. The purchase price of the component if it is bought D. The selling price of the product