Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Which of the following statements is CORRECTI a. In general, a firm with low operating leverage also has a small proportion of its total costs

image text in transcribed
Which of the following statements is CORRECTI a. In general, a firm with low operating leverage also has a small proportion of its total costs in the form of fixed costs. Ob Suppose a firm has less than its optimal amount of debt. Increasing its use of debt to the point where it is at its optimal capital structure will decrease the costs of both debt and equity financing. Oc. A firm with high business risk is more likely to increase its use of financial leverage than a firm with low business risk, assuming all else equal Od. There is no reason to think that changes in the personal tax rate would affect firms' capital structure decisions Oe. If a firm's after-tax cost of equity exceeds its after-tax cost of debt, it can always reduce its WACC by increasing its use of debt

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions

Question

How does selection differ from recruitment ?

Answered: 1 week ago