Discuss the following statement (Explain why you agree or disagree - Use a counterexample to disprove the statement if it is your final consideration).
a) "The discounted recovery period guarantees that all the projects we accept will never have a negative Net Present Value (NPV), although we may reject a good project, whose NPV is positive."
b) Modigliani and Miller completely ignore the fact that the higher the debt, the higher interest rate increases. Explain carefully if this objection is correct.
c) What is the difference between business risk and financial risk? How can they be measured in a market risk?