Homemade leverage is employed when a(n)............. : A)corporation uses debt to pay dividends to sharcholders. B)corporation uses debt exclusivcly to fund a corporate expansion project. C)investor uses debt to change ihls or her ckposure to financial loverage firm increases its level of debt. D)firm cinoloys any amount of debe in its capital

Homemade leverage is employed when a(n)............. : A)corporation uses debt to pay dividends to sharcholders. B)corporation uses debt exclusivcly to fund a corporate expansion project. C)investor uses debt to change ihls or her ckposure to financial loverage firm increases its level of debt. D)firm cinoloys any amount of debe in its capital

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter5: Risk Analysis

Section: Chapter Questions

Problem 2QE

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The optimal capital structure: a. Maximizes the value of equity but not the tax shield associated with debtb. Minimizes the tax shield associated with debtc. Maximizes the value of the company but not necessarily the tax shield associated with debtd. Maximizes the value of the company and the tax shield associated with debt
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