True or False:

-If bankruptcy costs are only incurred once the firm is in bankruptcy and its equity is worthless, then these costs will not affect the initial value of the firm.

-In a perfect market, if a change in leverage raises a firms earnings per share, the firms value rises.

Which company has higher debt ratio? Company with risky and intangible assets v.s. with tangible and safe assets. Company paying heavy taxes v.s. low taxes Profitable firm v.s. less profitable firm?