www.mhhe.com CORPORATE FINANCE: CORE PRINCIPLES & APPLICATIONS Published by McGraw-Hill/Irwin, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2011, 2009, 2007 by The McGraw-Hill Companies, Inc. All rights reserved.
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1.2 THE CORPORATE FIRM The fi rm is a way of organizing the economic activity of many individuals. A basic problem of the fi rm is how to raise cash. The corporate form of business—that is, organizing the fi rm as a corporation—is the standard method for solving problems encountered in rais- ing large amounts of cash.
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In recent years, large fi nancial institutions such as mutual funds and pension funds have been becoming the dominant owners of stock in the United States, and these institutions are becoming more active in corporate affairs. What are the implications of this trend for agency problems and corporate control? 1 0.
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If the company undertakes the proposed recapitalization, and there are corporate taxes, the ROE for each state of the economy is: ROE 2.79% 7.24% 10.03% %DROE –61.54% – +38.46%
https://www.csun.edu/~dm59084/FIN303/Homework%20FIN%20303.pdf
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