11) Which of the following statements is true about the debt to equity ratio?

The greater the debt to equity ratio the smaller the opportunity to increase the return on equity of a firm through financial leverage.

The lower the debt to equity ratio the higher the risk that financial leverage will have a negative impact on a firm's return on equity.

The size of a of a company's debt to equity ratio is directly related to amount of a firm's sales.

The greater the debt to equity ratio the greater the chance the firm will not meet its debt obligations.

12)Badger Corp is trying to decide whether to buy a new machine with a price of $40,000. Their analysis indicates the machine will generate annual cash flows of $11,000 for each of the next 6 years. The rate of return expected of any investment Badger make is 9%. Should Badger purchase the machine?