saint mba570 module 7 quiz

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Question 1.1.Equity in a firm with debt is called: (Points : 10)





Question 2.2.Which of the following is not one of Modigliani and Miller’s sets of conditions referred to as perfect capital markets? (Points : 10)





Question 3.3.Consider the following equation:E+D=U=A. TheUin this equation represents: (Points : 10)





Question 4.4.Assume that Rose Corporation’s (RC) has 5 million shares outstanding and its stock is trading for a price of $12.00 per share. RC is considering borrowing $12 million at a rate of 6% and using the proceeds to repurchase shares at the current price of $12.00. Following the borrowing of $12 and subsequent share repurchase, the number of shares that RC will have outstanding is closest to __________. (Points : 10)





Question 5.5.Rosewood Industries has EBIT of $450 million, interest expense of $175 million, and a corporate tax rate of 35%. Rosewood’s net income is closest to __________. (Points : 10)





Question 6.6.Which of the following statements is false? (Points : 10)





Question 7.7.Which of the following statements is false? (Points : 10)





Question 8.8.KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt. KD has had consistently stable earnings, and pays a 35% tax rate. Management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares. The value of KD’s unlevered equity is closest to __________. (Points : 10)





Question 9.9.Which of the following statements is false? (Points : 10)





Question 10.10.Which of the following statements is false? (Points : 10)




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