A firms debt financing decisions are generally affected by firm-specific factors as well as market, regulatory, and macro-economic conditions. You are asked to discuss the individual impact of six different scenarios (assuming everything else remains constant) on a firms debt financing decisions. Please be specific and provide the theoretical and empirical rationales in support of your responses. You can use the space provided in the matrix below or use a separate sheet to answer the questions.

Scenarios	Potential Impact on debt Financing
Variance of the firms cash flows is expected to decrease.
The U.S. corporate tax rate is expected to increase.
Investment in facilities and other tangible assets are expected to increase.
The chair of the Federal Reserve indicated that the Federal Fund rate is expected to remain very low for the foreseeable future.
New international acquisitions are expected to reduce the firms exposure to currency risk.
Securities and Exchange Commission (SEC) is expected to question the firm for possible misrepresentation of its annual reports.