Author: Anonymous

As a firm increases its use of debt, it becomes more financially leveraged and riskier.

The internal rate of return assumes that cash inflows are reinvested at the firm’s cost of capital.​

If regression analysis estimates that assets exceed liabilities and equity, the firm will require external sources of finance.​

If regression analysis estimates that assets exceed liabilities and equity, the firm will require external sources of finance.​

A periodic payment to retire a debt is illustrative of a sinking fund.​

Leverage ratios indicate the extent to which the firm uses debt financing.​

If two investments are mutually exclusive, the firm cannot make both investments.​

Increases in income taxes reduce a firm’s operating income.

If a firm’s current assets and current liabilities decline, the firm had a cash inflow.​

The cost of retained earnings tends to exceed the cost of issuing new stock because of the flotation costs.