For the next 30 days, the bondholders of Sound Effects have the option of exchanging their bonds for common shares of the firm's stock. As a result of these exchanges, you should expect the firm's debt-equity ratio to and the stock price to Multiple Choice decrease; decrease decrease, remain constant decrease increase increase; increase Increase, remain constant Of the following five U.S. industries, which one tends to have the highest level of debt as a percentage of the market value of debt plus equity? Multiple Choice o Electric utilities Airlines Fabric apparel Drugs Steel works In general, U.S. firms: Multiple Choice O tend to overweigh debt in relation to equity. that are highly profitable tend to have lower target debt-equity ratios than unprofitable firms. O tend to maintain similar capital structures across all industries. tend to maximize the use of every dollar of the tax benefits of debt. that are family-owned tend to have very low levels of debt. Rachel owns 100 percent of a gift shop with an equity value of $150,000. If she keeps the shop open 5 days a week, EBIT is $75,000. If the shop remains open 6 days a week, EBIT increases to $92,000 annually. Rachel needs an additional $50,000 which she can raise today by either selling stock or issuing debt at an interest rate of 7 percent. The principal amount would be repaid in equal annual payments at the end of the next five years. Ignore taxes. What will be the cash flow for the next year to Rachel if she issues stock to another individual, remains open 5 days a week, and distributes all the residual cash flow to the shareholders? Multiple Choice $92,000 $61,333 O $69.000 $42,000 $56,250