Modigliani and Miller's second article, which assumed the existence of corporate income taxes, led to the conclusion that a firm's value would be maximized, and its cost of capital minimized, if it used (almost) 100% debt. However, this model did not take account of bankruptcy costs. The existence of bankruptcy costs leads to the assumption of an optimal capital structure where the debt ratio is less than 100%.
Answer the following statement true (T) or false (F)
True
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What is the cost of the land, based upon the following data? Land purchase price $178,000 Broker's commission 15,000 Payment for the demolition and removal of existing building 5,000 Cash received from the sale of materials salvaged from the demolished building 2,000
The only difference between the direct and the indirect methods is the:
a. presentation of the cash flows from investing activities. b. presentation of the cash flows from financing activities. c. presentation of the cash flows from operating activities. d. presentation of the cash flows from noncash activities.
Which leader behavior is a prerequisite for the other adaptive leader behaviors?
A. regulate distress B. identify adaptive challenges C. maintain disciplined attention D. get on the balcony
Spice Corp. wants to acquire all the assets of Sugar Corp. Spice plans to pay for the assets by issuing its own corporate stock. Spice's board of directors has already approved the merger. In what circumstances would the approval of Spice's shareholders be required for this merger? Is the approval of Sugar's shareholders necessary? Explain.
What will be an ideal response?