Other things held constant, which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure?
A. Its sales are projected to become less stable in the future.
B. The bankruptcy laws are changed in a way that would make bankruptcy more costly to the firm and its stockholders.
C. Management believes that the firm's stock is currently overvalued.
D. The firm decides to automate its factory with specialized equipment and thus increase its use of operating leverage.
E. The corporate tax rate is increased.
Answer: E
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Differential revenues are expected future revenues that vary between the alternatives under consideration.
Answer the following statement true (T) or false (F)
The amount of the average investment for a proposed investment of $60,000 in a fixed asset, with a useful life of four years, straight-line depreciation, no residual value, and an expected total net income of $21,600 for the 4 years, is:
A) $10,800 B) $21,600 C) $ 5,400 D) $30,000
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a. may be written or spoken, verbal ,or nonverbal. b. tells the listener whether the message is understood. c. may be given in response to a direct request for it. d. all of these choices.
You sell your used car to a stranger. He gives you a cheque he knows is bad. By the time you find that out, he has sold the car to a third party. The third party paid a fair price and did not know that the vendor was a fraudsman
What is the situation now as between you and the third party? A) You can get the car returned. The fraudsman could not give good title, because he didn't have it. B) You are out of luck. Title has passed to the innocent third party. C) You can get the car returned. You and the third party are both innocent victims, so title reverts to the last party to have good title, which is you. D) The third party may keep the car, but will have to pay you damages. E) You can get the car returned, but you will have to pay the third party damages.