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Rickos Rickos
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6 years ago
Assume that the tax rate is 34% and bankruptcy costs are negligible until a firm's debt to equity ratio is greater than one.  If Madison Co. increases debt from 10% of its capital structure to 40%, cash flows to investors will
A) decrease.
B) remain the same.
C) increase.
D) A firm's cash flows are independent of it's capital structure.
Textbook 
Financial Management: Principles and Applications

Financial Management: Principles and Applications


Edition: 13th
Authors:
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LutionalLutional
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Rickos Author
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#2
6 years ago
I want to thank you for being so helpful
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