10_MoF_Mo1_2016_FS

Description:

Answer all questions and then press submit. We will discuss the solutions together.


Your firm is planning to invest in a new electrostatic power generation system. Electrostat Inc is a firm that specializes in this business. Electrostat has a stock price of $25 per share with 16 million shares outstanding. Electrostat's equity beta is 1.18. It also has $220 million in debt outstanding with a debt beta of 0.08. Your estimate of the asset beta for electrostatic power generators is closest to:






The value of a firm is maximized when the:






The basic lesson of MM theory is that the value of a firm is dependent upon the:






In an MM world with a classical tax system, the value of a levered firm equals the value of:






One conclusion from the free cash flow (FCF) hypothesis is that: