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In 2019, a company had zero debt. Assume that in 2020, the company adds $1m of debt with a 5% annual interest payment. Which statement

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In 2019, a company had zero debt. Assume that in 2020, the company adds $1m of debt with a 5% annual interest payment. Which statement accurately describes the impact this will have on profit margin in 2020? A. Profit margin will drop due to interest expense B. Debt is not expense, so profit margin does not change C. Profit margin will increase due to interest expense D. Debt is a balance sheet item, so profit margin will not change

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