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Question to I. According to the pecking order theory, which of the following are correct? There is an inverse relationship between a firm's profit level and its debt level Firms prefer to issue new debt rather than using retained earnings III. If internal funds are exhausted, then the firm will issue debt with the aim to hit its o IV. Equity is expensive and, due to information asymmetry, equity issuance drops mar 11. O I, III, and IV Ol, and III II, and IV I, and IV Question 17 Firm A has an operating profit of $1,130,000. Its interest expense is $450,000. What is the percentage EBIT can fall before times interest earned falls below one? 48.9% 60.2% 39.8% 51.1% Question 18 What is the cost of common stock on PMC Corp. if its beta is 2.1, required rate of retu risk-free rate is 2.2%, and PMC Corp's dividend yield is 2%? 18.79% 14.17%6 16.79% 12.17%

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