Which of the Following Statements Concerning the MM Extension with Growth

question 17

Multiple Choice

Which of the following statements concerning the MM extension with growth is NOT CORRECT?

• A) The tax shields should be discounted at the unlevered cost of equity.
• B) The value of a growing tax shield is greater than the value of a constant tax shield.
• C) For a given D/S, the levered cost of equity is greater than the levered cost of equity under MM's original (with tax) assumptions.
• D) For a given D/S, the WACC is greater than the WACC under MM's original (with tax) assumptions.
• E) The total value of the firm is independent of the amount of debt it uses.

Recognize the valuation techniques prescribed by AASB 13.

Identify and differentiate between Level 1, 2, and 3 inputs.

Understand the principles guiding the determination of the fair value.

Know the definition of the principal market and its significance in fair value measurement.

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Solutions that meet all the constraints of a particular problem, considered acceptable and implementable.

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Lines in a graph of a linear programming model representing limitations or restrictions on the resources available.