Assume That a Firm's Financial Analysts Determine That a Decrease

question 99

True/False

Assume that a firm's financial analysts determine that a decrease in the firm's debt-to-assets ratio will cause a decrease in both the component cost of debt r_d(1 − T)and the component cost of equity (r_s).This information tells us that the firm's present debt-to-assets ratio is above its optimal ratio.

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Definitions:

Agriculture

The science, art, and practice of cultivating plants and livestock.

Imports

Foreign goods and services purchased by domestic customers.

Domestic Consumers

Individuals or households within a country that purchase goods and services for personal use as opposed to international or business consumers.

Foreign-made

This term describes products that are produced outside of one's home country.