Finance

Lang, Ofek, and Stulz (1996) analyzed the relationship between leverag

Lang, Ofek, and Stulz (1996) analyzed the relationship between leverage and growth opportunities. They focus on the market’s assessment of the ability of the firm to generate profitable growth. Their measure of profitable growth opportunities is Tobin’s q ratio, the ratio of the market value of the firm’s equity to its book value. They summarize […]

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Date: September 19th, 2020

If all projects are assigned the same discount rate for purposes of ev

If all projects are assigned the same discount rate for purposes of evaluation, which of the following could occur? A) Low-risk projects could be rejected when in fact they are good investment choices. B) High-risk projects could be accepted when in fact they are poor investment choices. C) High-risk projects could be accepted when in […]

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Date: September 19th, 2020

Takelmer Industries has a different WACC for each of three types of pr

Takelmer Industries has a different WACC for each of three types of projects. Low-risk projects have a WACC of 8.00%, average-risk projects a WACC of 10.00%, and high-risk projects a WACC of 12%. Which of the following projects do you recommend the firm accept? Project Level of Risk IRR A Low 9.50% B Average 8.50% […]

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Date: September 19th, 2020