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School
Villanova University *
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Course
430
Subject
Finance
Date
Nov 24, 2024
Type
png
Pages
1
Uploaded by ConstableEel2755
Under
the
M&M
assumptions
with
tax,
the
value
of
the
company
with
debt
is
the
value
of
the
company
without
debt
plus
the
present
value
of
the
interest
tax
shield.
TRUE|
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Related Questions
Why is the after-tax cost of debt, rather than its before-taxrequired rate of return, used to calculate the weighted average costof capital?
arrow_forward
Following IFRS, which statement is false?
Group of answer choices
The revaluation surplus account is a specific account reported as an unrealized gain in the statement of comprehensive income.
If the revaluation initially increases the long-term operating asset's carrying value, the firm records the difference between the carrying value and the fair value (the unrealized gain) in the revaluation surplus account.
The revaluation surplus account is a specific account reported in other comprehensive income (OCI) in the statement of comprehensive income.
If a long-term operating asset's fair value decreases in subsequent accounting periods, after an earlier write-up, the firm reduces the revaluation surplus if it exists.
arrow_forward
The equation for M & M Proposition I, with taxes, is best shown as?
arrow_forward
EBITD is equivalent to profits after taxes. true or false?
arrow_forward
What is NOPAT (net operating profit after taxes)?
arrow_forward
A company records an unrealized profit on short-term securities. This would result in what type of difference and in what type of deferred income tax? Type of Difference /deferred tax Select one: a.Permanent / Liability B.Temporary / Liability c.Temporary / Asset d.Permanent / Asset
arrow_forward
What is the equation for M & M Proposition II, without taxes, is best shown as?
arrow_forward
Which one of the following statements related to capital gains is correct?
Multiple Choice
O
O
O
O
The capital gains yield includes only realized capital gains.
An increase in an unrealized capital gain will increase the capital gains yield.
The capital gains yield must be either positive or zero.
The capital gains yield is expressed as a percentage of a security's total return.
The capital gains yield represents the total return earned by an investor.
arrow_forward
Which mathematial expression is used to calculate the after tax cost of debt?
arrow_forward
The equivalent after-tax return for an investment is computed a
O
● Pretax return / (1 - tax rate)
O Pretax return / tax rate
Pretax return * tax rate
O Pretax return * (1 - tax rate)
arrow_forward
A company uses the equity method to account for an investment for financial reporting purposes. This would result in what type of difference and in what type of deferred income tax?
Oa. Type of Difference
Permanent
Ob. Ives of Difference
Permanent
Oc. Ives of Difference
Temporary
Od. Type of Difference
Temporary
Deferred Tax
Asset
Deferred Tax
Liability
Deferred Tax
Asset
Deferred Tax
Liability
arrow_forward
MC question attached
arrow_forward
After tax cost of interest deals with the fact that interest is deductible for tax purposes. Therefore, the after-tax cost of interest is calculated by,
A. Calculating the income tax of a corporation before depreciation
B. Comparing interest to net income
C. Interest expense times (1- tax rate)
D. Interest expense times the tax rate
arrow_forward
Following IFRS, which statement is false?
Group of answer choices
The revaluation surplus account is a specific account reported as an unrealized gain in the statement of comprehensive income.
If a long-term operating asset's fair value decreases in subsequent accounting periods, after an earlier write-up, the firm reduces the revaluation surplus if it exists.
If the revaluation initially increases the long-term operating asset's carrying value, the firm records the difference between the carrying value and the fair value (the unrealized gain) in the revaluation surplus account.
The revaluation surplus account is a specific account reported in other comprehensive income (OCI) in the statement of comprehensive income.
arrow_forward
Discuss why the after-tax cost of equity (common or preferred) does not have to be adjusted by the marginal income tax rate for the firm.
arrow_forward
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Related Questions
- Why is the after-tax cost of debt, rather than its before-taxrequired rate of return, used to calculate the weighted average costof capital?arrow_forwardFollowing IFRS, which statement is false? Group of answer choices The revaluation surplus account is a specific account reported as an unrealized gain in the statement of comprehensive income. If the revaluation initially increases the long-term operating asset's carrying value, the firm records the difference between the carrying value and the fair value (the unrealized gain) in the revaluation surplus account. The revaluation surplus account is a specific account reported in other comprehensive income (OCI) in the statement of comprehensive income. If a long-term operating asset's fair value decreases in subsequent accounting periods, after an earlier write-up, the firm reduces the revaluation surplus if it exists.arrow_forwardThe equation for M & M Proposition I, with taxes, is best shown as?arrow_forward
- EBITD is equivalent to profits after taxes. true or false?arrow_forwardWhat is NOPAT (net operating profit after taxes)?arrow_forwardA company records an unrealized profit on short-term securities. This would result in what type of difference and in what type of deferred income tax? Type of Difference /deferred tax Select one: a.Permanent / Liability B.Temporary / Liability c.Temporary / Asset d.Permanent / Assetarrow_forward
- What is the equation for M & M Proposition II, without taxes, is best shown as?arrow_forwardWhich one of the following statements related to capital gains is correct? Multiple Choice O O O O The capital gains yield includes only realized capital gains. An increase in an unrealized capital gain will increase the capital gains yield. The capital gains yield must be either positive or zero. The capital gains yield is expressed as a percentage of a security's total return. The capital gains yield represents the total return earned by an investor.arrow_forwardWhich mathematial expression is used to calculate the after tax cost of debt?arrow_forward
- The equivalent after-tax return for an investment is computed a O ● Pretax return / (1 - tax rate) O Pretax return / tax rate Pretax return * tax rate O Pretax return * (1 - tax rate)arrow_forwardA company uses the equity method to account for an investment for financial reporting purposes. This would result in what type of difference and in what type of deferred income tax? Oa. Type of Difference Permanent Ob. Ives of Difference Permanent Oc. Ives of Difference Temporary Od. Type of Difference Temporary Deferred Tax Asset Deferred Tax Liability Deferred Tax Asset Deferred Tax Liabilityarrow_forwardMC question attachedarrow_forward
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Recommended textbooks for you
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning

Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning