The level of debt does not affect the business risk of firm

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Reference no: EM13883886

Which Statement is False?

a. adding debt will increase the firms ROE as long as the cost of debt is less than their basic earning power

b. the level of debt does not affect the business risk of a firm

c. if a company increases its level of debt, then its net income will increase

d. According to the trade off model of capital structure, the costs of debt and equity will both rise as the level of debt increases.

Reference no: EM13883886

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The level of debt does not affect the business risk of firm : adding debt will increase the firms ROE as long as the cost of debt is less than their basic earning power. the level of debt does not affect the business risk of a firm. if a company increases its level of debt, then its net income will increase

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