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Ma1. Please give only typed answer. Which of the following consequences of increasing the debt of the firm causes the WACC to increase? 1) Debtholders having a prior claim to stockholders II) Interest rate tax shield III) The increased risk of bankruptcy IV) The cost of debt being less than the cost of equity  I and II    I, II, and IV  I, III, and IV  I and III  II and IV

Ma1. Please give only typed answer. Which of the following consequences of increasing the debt of the firm causes the WACC to increase? 1) Debtholders having a prior claim to stockholders II) Interest rate tax shield III) The increased risk of bankruptcy IV) The cost of debt being less than the cost of equity  I and II    I, II, and IV  I, III, and IV  I and III  II and IV

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Ma1.

Please give only typed answer.

Which of the following consequences of increasing the debt of the firm causes the WACC to

increase?

1) Debtholders having a prior claim to stockholders

II) Interest rate tax shield

III) The increased risk of bankruptcy

IV) The cost of debt being less than the cost of equity

 I and II  

 I, II, and IV

 I, III, and IV

 I and III

 II and IV

Which of the following consequences of increasing the debt of the firm causes the WACC to increase? 1) Debtholders having a prior claim to stockholders II) Interest rate tax shield III) The increased risk of bankruptcy IV) The cost of debt being less than the cost of equity I and II O I, II, and IV OI, III, and IV I and III II and IV
Transcribed Image Text:Which of the following consequences of increasing the debt of the firm causes the WACC to increase? 1) Debtholders having a prior claim to stockholders II) Interest rate tax shield III) The increased risk of bankruptcy IV) The cost of debt being less than the cost of equity I and II O I, II, and IV OI, III, and IV I and III II and IV
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