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Questions and Answers
What is the market value of the levered firm Y's debt?
What is the market value of the levered firm Y's debt?
- Rs.50,000
- Rs.48,000
- Rs.12,000
- Rs.60,000 (correct)
What is the formula to calculate the Net Earnings (NI) of a levered firm?
What is the formula to calculate the Net Earnings (NI) of a levered firm?
- $NI = EBIT - Tax$
- $NI = EBIT - Interest$ (correct)
- $NI = EBIT - Interest - Tax$
- $NI = EBIT + Interest$
What is the cost of debt for the levered firm X?
What is the cost of debt for the levered firm X?
- 12%
- 10% (correct)
- 6%
- 11%
What is the formula to calculate the total net income of a firm?
What is the formula to calculate the total net income of a firm?
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