Please give detailed reason instead of only yes or no. After you finish the homework, please then submit your homework before the due date, 23:59 pm Sunday. (do not email me your homework.)

Q1 (5 points)




Q2 (12 points) Note you need to give detailed reason on why they are wrong.



Q3 (18 points) Note you need to give detailed reason.



Part B : EXPLAIN ANY 4 of the bullet points with at least 5 lines each

explain Financial Leverage -use of debt

examine MM theory (Modigliani & Miller)

illustrate how to calculate the Weighted Average Cost of Capital

What is the difference between Business risk and financial risk?

What is the difference between trade-off theory and pecking-order theory. What does evidence tells us about their validity If you are manager, which theory you reply upon to make financing decisions?

What is the Agency costs ? Do you think if they are important and why ?



PART C Explain ALL 3

· MO 3.1 Define concepts of the capital budget process

MO3.2 Evaluate capital budget standards

Mo3.3 Compare measures and decisions of capital budget

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