Quiz Ch 16 – Impact of Debt Usage
Fundamentals of Corporate Finance
Brealey, Myers, and Marcus
10th Edition
What will be influenced by the utilization of debt?
What will be influenced by the utilization of debt?
What happens when the debt-equity ratio decreases in the presence of non-risk-free debt?
Which factor leads to higher costs when a firm increases it in the context of financial distress costs?
What happens to a corporation’s value when it issues permanent debt?
How does the present value of a perpetual tax shield change as the firm’s tax rate and the amount of debt vary?
What does it signify when a firm’s expected return on equity is the same as its expected return on assets?
What causes the present value of the costs of financial distress to increase as the debt ratio rises?
What do fluctuations in a firm’s operating income primarily signify?
What is the impact of leverage on shareholders’ expected return and risk?
When corporate taxes and the cost of financial distress are considered, the market value of a firm is determined by what relationship between the value of the all-equity firm, the present value of the tax shield, and the costs of financial distress?