1.Ignore taxes and hold the cost of debt constant. Which one of the following describes the relationship between debt financing and the cost of equity?

(Choose the correct answer)

The effect of debt financing on the cost of equity cannot be determined with given information.

Debt financing does not affect the cost of equity.

Debt financing is positively associated with the cost of equity.

Debt financing is negatively associated with the cost of equity.

2.Consider taxes. A firm's WACC is the same as the firm relies more on debt financing.

(Choose the correct answer)

False

No answer text provided.

No answer text provided.

True