Questions
(21-1)
Define each of the following terms:
a. Interest tax shields; value of tax shield
b. Adjusted present value (APV) model
c. Compressed adjusted present value (CAPV) model
(21-2)
Modigliani and Miller assumed that firms do not grow. How does positive growth change their conclusions about the value of the levered firm and its cost of capital?
How does positive growth change their conclusions about the value of the levered firm and its cost of capital?
