Question
15) The chief executive officer (CEO) of Telvor communications Inc., a US telecom firm, appears on a business news television program. She suggests that the
15) The chief executive officer (CEO) of Telvor communications Inc., a US telecom firm, appears on a business news television program. She suggests that the firms future earnings will be stable, and that the firms debt/equity (D/E) ratio will be constant. A likely objective for her TV appearance is:
A) She wants to convince investors that Telvor earnings growth will rise. B) She wants to suggest that the firms cost-of-equity is increasing, to support a higher stock price. C) She wants to indicate that Telvors interest tax shield will expand, thus supporting a higher stock price. D) She wants to convince investors that Telvor deserves a lower weighted-average-cost-of-capital (WACC), in order to support a higher firm value.
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