Multiple Choice
It is not correct to discount the cash flows of a levered firm with the cost of equity of the unlevered firm because
A) leverage changes the unlevered cost of equity.
B) cost of debt decreases in this setting.
C) leverage decreases the risk of equity of the firm.
D) leverage increases the risk of the equity of the firm.
Correct Answer:
Verified
Correct Answer:
Verified
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