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Why does the WACC decrease as a company begins to take on debt and then increase after a certain point?
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- Explain why WACC goes down when a company starts taking a debt and then suddenly increases after a particular periodWhat is WACC? Why do firms compute it? What happens to WACC when the debt level of a firm changes?Which of the following is true regarding a company assuming more debt? Select one: a. Assuming more debt is always bad for the company b. Assuming more debt reduces leverage c. Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds d. Assuming more debt is always good for the company
- Which of coming up next isn't a money outpouring? a) Increase in Prepaid costs b) Increase in debt holders c) Increase in stock d) Increase in lendersWhat does it mean when a company has zero net income but its stock price has increased? How do you recognize the change under the equity method?What make ROE(return on equity) of a company decrease further into negatives even though their financial leverage starts to rises? If a company multiplier for financial leverage starts to rise, what does it implies? Why?
- Which is the quickest way to determine whether a firm has too much debt?Suppose a company increases the price of its product and demand hardly declines.which of the following will increase? A) profit margin B) return - on - equity C) taxes D) all the aboveWhich of the following would indicate an improvement in a company's financial position, holding other things constant? The profit margin declines. O The MV/BV ratio increases. The ROA decreases. The TIE increases. O The liability-to-asset ratio increases.