Which of the following statements regarding leverage is false?

Multiple Choice

• As a firm levers up, shareholders are exposed to greater risk.

• The benefits of leverage will not be as great in a firm with substantial accumulated losses or other types of tax shields compared to a firm without many tax shields.

• The ultimate effect of leverage depends on the firm's EBIT.

• If things go poorly for the firm, increased leverage provides greater returns to shareholders (as measured by ROE and EPS).

• Beyond a certain point, the costs of financial distress outweigh the benefits of leverage.