If a Firm Uses No Debt,the Uncertainty Inherent in Projections

question 47

True/False

If a firm uses no debt,the uncertainty inherent in projections of future returns on equity can be described as business risk.

---

Definitions:

Retained Earnings

Profits that a company keeps after dividends have been paid out to shareholders, used for reinvestment in the business or to pay down debt.

Capital

Resources made and used by people to produce and distribute goods and services; includes tools, machinery, and buildings.

Interest Rates

Charges applied on borrowed money or earned through deposits, varying according to the type, term, and risk associated with the financial product.

Present Value

The present value of a future sum of money or series of cash flows, discounted at a certain rate of return.