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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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