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 decreases the risk of equity of the firm
B) leverage changes the unlevered cost of equity
C) leverage increases the risk of the equity of the firm
D) cost of debt decreases in this setting
Correct Answer:
Verified
Correct Answer:
Verified
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