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Please refer to the equation given below to answer the following questions: Assume that all other variables in the equation do not change L =

Please refer to the equation given below to answer the following questions:
Assume that all other variables in the equation do not change
L=u(1+(1-t)(DE))
where
L= Levered Beta for equity in the firm
u= Unlevered beta of the firm (i.e., the beta of the firm without any debt)
t= Corporate tax rate
DE= Debt/Equity Ratio
16. An increase in the Debt results in
a. An increase in growth rate
b. An increase in cost of equity
c. A decrease in cost of equity
d. An increase in firm value
e. None of the above
17. An increase in the equity results in
a. An increase in growth rate
b. An increase in cost of equity
c. A decrease in cost of equity
d. An increase in firm value
e. None of the above
18. An increase in tax rate results in
a. An increase in growth rate
b. An increase in cost of equity
c. A decrease in cost of equity
d. An increase in firm value
e. None of the above
19. An increase in unleveraged beta results in
a. An increase in growth rate
b. An increase in cost of equity
c. A decrease in cost of equity
d. An increase in firm value
e. None of the above
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