How does a firm leverage its capital structure

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1. How can there be interest expense each period for zero-coupon bonds if there are no interest payments?

2. Under the effective interest rate method, describe the difference in calculating the (1) interest payment and (2) interest expense for the period.

3. How does a firm ‘‘leverage'' its capital structure? When is leverage advantageous? When is it disadvantageous? Who receives the advantage or bears the disadvantage of leverage?

Reference no: EM131342669

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