Given that firms can issue multiple share classes of common stock, which of the following is INCORRECT? Select one: a. The cash flow rights of each share class must be identical. b. All of the share classes must be publicly traded. c. Each share class can only elect directors for their share class. d. Firms cannot restrict the ownership of share classes. e. All of the above answers are incorrect about dual class firms. The LMN Corporation had Net Operating Working Capital in 2019 of $1,200 and $1,400 in 2020. LMN has EBIT of $3,000, Depreciation and Amortization of $450, and Capital Expenditures of $600. If LMN has a corporate tax rate of 21%, what is the free cash flow for the firm? Select one: a. Less than $500 b. Between $500 and $650 c. Between $650 and $800 d. Between $800 and $950 e. Greater than $950 The RQP corporation is looking to reduce their cost of capital. In calculating the return on equity for the firm, the firm uses CAPM. Which of the following events would reduce the firm's weighted average cost of capital? Select one: a. The firm decides to issue a large amount of debt to take advantage of the cheaper cost of debt versus equity. b. The firm sees a dramatic increase in beta. c. Inflation rates increase d. The market risk premium decreases. e. None of the above conditions will cause the firm's weighted average cost of capital to decrease
Given that firms can issue multiple share classes of common stock, which of the following is INCORRECT? Select one: a. The cash flow rights of each share class must be identical. b. All of the share classes must be publicly traded. c. Each share class can only elect directors for their share class. d. Firms cannot restrict the ownership of share classes. e. All of the above answers are incorrect about dual class firms. The LMN Corporation had Net Operating Working Capital in 2019 of $1,200 and $1,400 in 2020. LMN has EBIT of $3,000, Depreciation and Amortization of $450, and Capital Expenditures of $600. If LMN has a corporate tax rate of 21%, what is the free cash flow for the firm? Select one: a. Less than $500 b. Between $500 and $650 c. Between $650 and $800 d. Between $800 and $950 e. Greater than $950 The RQP corporation is looking to reduce their cost of capital. In calculating the return on equity for the firm, the firm uses CAPM. Which of the following events would reduce the firm's weighted average cost of capital? Select one: a. The firm decides to issue a large amount of debt to take advantage of the cheaper cost of debt versus equity. b. The firm sees a dramatic increase in beta. c. Inflation rates increase d. The market risk premium decreases. e. None of the above conditions will cause the firm's weighted average cost of capital to decrease
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Given that firms can issue multiple share classes of common stock, which of the following is INCORRECT?
Select one:
a. The cash flow rights of each share class must be identical.
b. All of the share classes must be publicly traded.
c. Each share class can only elect directors for their share class.
d. Firms cannot restrict the ownership of share classes.
e. All of the above answers are incorrect about dual class firms.
The LMN Corporation had Net Operating Working Capital in 2019 of $1,200 and $1,400 in 2020. LMN has EBIT of $3,000, Depreciation and Amortization of $450, and Capital Expenditures of $600. If LMN has a corporate tax rate of 21%, what is the free cash flow for the firm?
Select one:
a. Less than $500
b. Between $500 and $650
c. Between $650 and $800
d. Between $800 and $950
e. Greater than $950
The RQP corporation is looking to reduce their cost of capital. In calculating the return on equity for the firm, the firm uses CAPM . Which of the following events would reduce the firm's weighted average cost of capital?
Select one:
a. The firm decides to issue a large amount of debt to take advantage of the cheaper cost of debt versus equity.
b. The firm sees a dramatic increase in beta.
c. Inflation rates increase
d. The market risk premium decreases.
e. None of the above conditions will cause the firm's weighted average cost of capital to decrease.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education