Question
T or F: If a firm utilizes debt financing, an X% decline in earnings before interest and taxes (EBIT) will result in a decline in
T or F: If a firm utilizes debt financing, an X% decline in earnings before interest and taxes (EBIT) will result in a decline in earnings per share that is larger than X%
T or F: Financial risk refers to the extra risk stockholders bear as a result of using debt as compared with the risk they would bear if no debt were used
T or F: If a projects risk is higher than that of the firms as a whole, the cost of debt for the project would be higher than that for the firm, but the cost of equity for the project would be equal to that of the firm
T or F: Short-term debt is always excluded from the WACC calculation due to its short-term nature 8. For two mutually exclusive projects, the NPV and IRR criteria may select a different project
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