Question
In the expression: ROE = ROA X Equity Multiplier, if the ROE goes down as the Equity multiplier goes up signifies that a the tax
In the expression: ROE = ROA X Equity Multiplier, if the ROE goes down as the Equity multiplier goes up signifies that
| a | the tax benefit of debt supersedes risk of bankruptcy. |
| b | the ROA must be going up. |
| c | the firm is enjoying the benefits of financial leverage. |
| d | the risk of bankruptcy supersedes the tax benefit of debt. |
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Contemporary Financial Management
Authors: R. Charles Moyer, James R. McGuigan, William J. Kretlow
11th Edition
0324653506, 978-0324653502
