The Use of Debt in a fiRm's Capital Structure Is

question 322

Multiple Choice

The use of debt in a firm's capital structure is called:

• A) Liquidity.
• B) Equity financing.
• C) Free cash flow.
• D) Net working capital.
• E) Financial leverage.

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Definitions:

NPV

Net Present Value (NPV) is a financial metric that calculates the present value of all cash flows, both incoming and outgoing, associated with a project or investment.

Cash Flow

The total amount of money being transferred into and out of a business, affecting its liquidity, solvency, and operational capabilities.

IRR

Internal Rate of Return, a financial metric used to estimate the profitability of potential investments.

Cash Flow

The total amount of money being transferred in and out of a business, particularly in handling its operational activities and investments.