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Author Question: If Miller and Modigliani had incorporated the costs of bankruptcy into their model, it is very ... (Read 919 times)

Austinleez3

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Question 1

If a firm utilizes debt financing, an X% decline in earnings before interest and taxes (EBIT) will result in a decline in earnings per share that is larger than X.

◦ true
◦ false

Question 2

If Miller and Modigliani had incorporated the costs of bankruptcy into their model, it is very likely that they would have concluded that 100% debt financing is optimal.

◦ true
◦ false


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Marked as best answer by Austinleez3 on Aug 7, 2023

BryanAultm

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Austinleez3

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Reply 2 on: Aug 7, 2023
YES! Correct, THANKS for helping me on my review


raenoj

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Reply 3 on: Yesterday
Excellent

 

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