第五次作业答案.docVIP

第五次作业答案 1. In an MM frictionless environment, where there are no taxes and contracts are costless to make and enforce, the wealth of the shareholders is the same no matter what capital structure the firm adopts. In such an environment, neither the stock price nor shareholders wealth would be affected. In the real world Dividos management might be able to create shareholder value by issuing debt and repurchasing shares in two ways: ( By reducing corporate taxes ( By reducing the free cash flow available to management and exposing itself to greater market discipline. The formula for EPS without