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How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its cost of equity, rs; and its WACC? Indicate with an increase (I), a decreease (D), or no change (N) whether the factor would raise, lower, or have an indeterminate effect on the item in question. Assume for each answer that other things are held constant, even though in some instances this would probably not be true.      rd (1-t) rs  WACC 1) The corporate tax rate is lowered.         2) The Federal Reserve tightens credit.         3) The firm uses more debt; that is, it increases its debt ratio         4) The dividend payout ratio is increased.         5) The firm expands into a risky new area.         6) Investors become more risk-averse.         7) The firm is an electric utility with a large investment innuclear plants.  Several states are considering a ban on nuclear power generation.

How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its cost of equity, rs; and its WACC? Indicate with an increase (I), a decreease (D), or no change (N) whether the factor would raise, lower, or have an indeterminate effect on the item in question. Assume for each answer that other things are held constant, even though in some instances this would probably not be true.  1) The corporate tax rate is lowered.         2) The Federal Reserve tightens credit.         3) The firm uses more debt; that is, it increases its debt ratio

How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its cost of equity, rs; and its WACC? Indicate with an increase (I), a decreease (D), or no change (N) whether the factor would raise, lower, or have an indeterminate effect on the item in question. Assume for each answer that other things are held constant, even though in some instances this would probably not be true.      rd (1-t) rs  WACC 5) The firm expands into a risky new area.         6) Investors become more risk-averse.         7) The firm is an electric utility with a large investment innuclear plants.  Several states are considering a ban on nuclear power generation.

How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its cost of equity, rs; and its WACC? Indicate with an increase (I), a decreease (D), or no change (N) whether the factor would raise, lower, or have an indeterminate effect on the item in question. Assume for each answer that other things are held constant, even though in some instances this would probably not be true.      rd (1-t) rs  WACC 4) The dividend payout ratio is increased.         5) The firm expands into a risky new area.         6) Investors become more risk-averse.         7) The firm is an electric utility with a large investment innuclear plants.  Several states are considering a ban on nuclear power generation.

Why is the after-tax cost of debt, rather than its before-taxrequired rate of return, used to calculate the weighted average costof capital?

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.

Which of the following statements are true about the interest-burden ratio? Check all that apply: It can be expressed as EBIT/Interest Expense. If the company has no financial leverage, the interest-burden ratio will be equal to 0. A company with higher financial leverage will have a lower interest-burden ratio. If the company has no financial leverage, the interest-burden ratio will be equal to 1. It can be expressed as Net profits/Pretax profits.

The equation for M & M Proposition I, with taxes, is best shown as?

EBITD is equivalent to profits after taxes. true or false?

Does this solution work with the formula below?AFN = [((Total Assets/Sales)(∆Sales))-((Current Liabilities/Sales)(∆Sales))] - (Earnings After Tax - Dividends)

Is there a reason to pick one over the other? Which formula would apply to a certain company or scenario? 1. FCFF=CFO +Int (1-Tax rate) - FCInv 2. FCFF=NI + NCC + Int (1-Tax rate)-FCInv-WCInv 3. FCFF=EBIT (1-Tax rate) + Dep - FCInv -WCInv 4. FCFF=EBITDA (1-Tax Rate) + Dep (tax rate) - FCInv - WCInv

What is NOPAT (net operating profit after taxes)?

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

When one uses the after-tax weighted average cost of capital (WACC) to value a levered firm, the interest tax shield is:   Multiple Choice A) capitalized by the levered cost of equity. B) not accounted for by the use of the WACC. C) automatically considered because the after-tax cost of debt is included within the WACC formula.  D) considered by deducting the interest payment from the cash flows.

Determine the formula for EVA. (WACC = Weighted-average cost of capital) After tax operating inc. Current liabilities Market value of debt Market value of equity Operating income Revenues Total assets WACC x ( )) = EVA

Which is not a benefit of debt to the corporation?a. interest payments are tax deductibleb. when debt is used heavily, it increases stock valuec. In periods of inflation, debt is paid back with amounts that are worth less than the ones borrowed.d. compared to equity, debts have a lower cost of capitale. answer not given

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Which of the following will increase the WACC for a tax-paying company? Decrease the proportion of equity financing Decrease the proportion of debt financing Decrease the market value of the equity Increase the market value of the debt