Financial Leverage Benefits Shareholders When the Return on ____

question 8

Multiple Choice

Financial leverage benefits shareholders when the return on ____.

• A) assets is greater than the cost of debt
• B) equity is greater than the cost of debt
• C) investments is less than the weighted cost of capital
• D) equity is less than the cost of debt

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Definitions:

Commercially Feasible

A product or project is considered commercially feasible if it is likely to generate a sufficient level of income to outweigh its costs and risks.

Tangible E&E Assets

Tangible Exploration & Evaluation Assets; physical assets used in the exploration and evaluation of mineral resources.

Fair Value

The estimated market price at which an asset or liability could be bought or sold in a current transaction between willing parties.