Homework:
Text Book: Corporate Finance, The Core (3rd Edition), 3rd ISBN: 978-0133097894
Questions: Responses to essay questions should be a minimum of 230 words.
o What type of capital structure should a firm choose and why? In you answer, be sure to include capital structure fallacies and their effects on a firm's decision.
o Define and discuss MM Proposition I with its implications, and the roles of homemade leverage and the Law of One Price in the development of the proposition.
o What is leveraged recapitalization and what effects does it have on the value of equity?
o Define the optimal fraction of debt and the growth rate of a firm. What is the relationship between the two?
Essays Problem
Responses to essay questions should be a minimum of 250 words, using APA format.
o Define the three conditions that make up a perfect capital market, and then compare and contrast the effects of perfect capital markets and imperfect capital markets on value. Can they create or destroy value? Explain.
o Define EBIT and discuss why the optimal level of leverage from a tax-saving perspective is the level at which interest equals EBIT. Does this have a connection with under-leveraging corporations--both domestically and internationally?
Format your homework according to the following formatting requirements:
o The answer should be typed, using Times New Roman font (size 12), double spaced, with one-inch margins on all sides.
o The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
o Also include a reference page. The Citations and references must follow APA format. The reference page is not included in the required page length.