The use of debt creates a benefit to firms that is referred to as the interest tax shield.

Part A options:

	True
	False

Part B

A firm increases its business risk, but doesnt want its total risk to change. This firm should alter its capital structure to use more debt and less equity.

options:

	True
	False

Part c

The optimal mix of debt and equity used by a firm is the one that minimizes the firms wacc.

options:

	True
	False