The Use of Debt in the Firm's Capital Structure Will

question 30

Multiple Choice

The use of debt in the firm's capital structure will increase ROE if the firm:

• A) has more debt than equity.
• B) pays less in taxes than in interest.
• C) earns a higher return than the rate paid on debt.
• D) has a times interest earned greater than 1.0.

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Definitions:

Stethoscope

A medical instrument used by healthcare professionals to listen to internal body sounds, such as the heartbeat or breathing.

Spirometer

A medical instrument used to measure the volume of air inhaled and exhaled by the lungs, commonly used in diagnosing respiratory disorders.

Otoscope

A medical device used to look into the ears, allowing for the examination of the ear canal and tympanic membrane.

Mensuration

The process of measuring.