Business School Flashcards
0
Q
Enterprise value
A
Market cap + debt - cash
This is the purchase price of the firm
1
Q
Market capitalization
A
Outstanding shares * share price
2
Q
Chapter 7 Bankruptcy
A
Liquidation. Firm must sell all the assets of the firm
3
Q
Debt overhang
A
Firm does not invest in positive npv projects bc debt holders receive most of the benefits
4
Q
APV
A
Values npv of project plus npv of debt tax shields. This method is used when there isn’t a target capital structure.
