Which of the following approaches advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies?

Net Income Approach
Traditional Approach
Modigliani-Miller Approach
Net operating Income

LohaHridoy

4 views

2025-01-04 04:42

1 Answers

AhmedNazir

Answer: Option 1

Net Income Approach advocates that the costs of equity capital and debt capital remain unaltered when the degree of leverage varies. Net Income Approach suggests that value of the firm can be increased by decreasing the overall cost of capital (WACC) through higher debt proportion.

4 views Answered 2022-09-01 13:21

Related Questions

Study the following statements.i) The displacement method is more useful when degree of kinematic indeterminacy is greater than the degree of static indeterminacy.ii) The displacement method is more useful when degree of kinematic indeterminacy is less than the degree of static indeterminacy.iii) The force method is more useful when degree of static indeterminacy is greater than the degree of kinematic indeterminacy.iv) The force method is more useful when degree of static indeterminacy is less than the degree of kinematic indeterminacy.The correct answer is?

1 Answers 7 Views

In an income statement, when costs become cost of sold goods and manufactured products are sold, such costs are?

1 Answers 4 Views

When a company uses increased fixed cost for production, this is an example of what type of leverage.?

1 Answers 6 Views

Directions : In each of the following questions a statement is given, followed by two conclusions. Give answer : Statements : The eligibility for admission to the course is minimum second class Master's degree. However, the candidates who have appeared for the final year examination of Master's degree can also apply. Conclusions : I. All candidates who have yet to get their Master's degree will be there in the list of selected candidates. II. All candidates having obtained second class Master's degree will be there in the list of selected candidates.?

1 Answers 4 Views

Direction : Two statements I and II are given. These statement may be either independent causes or may be effects of independent causes or a common cause. One of these statements may be the effect of the other statements. Read both the statements and decide which of the following answer choice correctly depicts the relationship between these two statements. Mark answer : I. The government has decided to give tax benefits for small savings for investments and benefit accruals. However, all withdrawals of such savings are to be taxed. II. People have been investing more in small savings than in equity market to avail maximum tax benefits.?

1 Answers 5 Views

Costs that are unavoidable and remain unchanged no matter what done are classified as?

1 Answers 5 Views

If A varies directly proportional to C and B also varies directly proportional to C, which one of the following is not correct ?

1 Answers 5 Views

Which of the following systems implementation approaches should be used if you want to run the old system and the new system at the same time for a specified period?

1 Answers 6 Views

The annuity which refers to a debt payment for recovering the initial amount or capital in equal periodical payments, is known as;?

1 Answers 7 Views

Fixed capital investment of a chemical plant is the total amount of money needed to supply the necessary plant and manufacturing facilities plus the working capital for operation of the facilities. Which of the following components of fixed capital investment requires minimum percentage of it?

1 Answers 4 Views

এক্সাম দিয়ে মেধা যাচাই করুন

Job Preparation (1125)

Admission (754)

এসএসসি (10)

এইচএসসি (5)