Which of the Following Ways Does Borrowing Help Increase Potential

question 21

Multiple Choice

Which of the following ways does borrowing help increase potential profits?

• A) By increasing the weighted average cost (WAC)of the business
• B) By allowing less debt to be included in the capital mix
• C) By providing capital funds for additional business opportunities
• D) By increasing the cost of capital of the business

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Definitions:

Freehold Estate

A type of real property ownership where the owner has indefinite duration of ownership rights, including the land and buildings.

Life Estate

A property interest that lasts for the lifetime of a specific individual, after which the property passes to another recipient.

Joint Tenancy

A form of property co-ownership that provides each tenant with an equal share and rights in the property, with the provision of right of survivorship.

Enforceable

A quality of law or agreement that allows it to be legally imposed or acted upon, ensuring compliance.