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  3. 1. m&m's proposition i states that a company's

1. M&M's Proposition I states that a company's value is independent of its capital structure....

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Question

Accounting

1.

M&M's Proposition I states that a company's value is independent of its capital structure.

True

False

4.

Increasing a company's leverage has no effect on its cost of equity.

True

False

7.

The NPV rule, which says companies should invest in projects for which NPV is greater than 0, depends on the assumption of value maximization.

True

False

9.

Leverage and liquidity generally rise or fall together.

True

False

11.

Selecting investment projects according to rules based either on project NPV or IRR results in maximizing firm value.

True

False

15.

Which information is NOT required when calculating the weighted average cost of capital for a company with debt?

Its capital structure ratios

Its cost of debt

Its current ratio

Its tax rate

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