Question: 1a)How do a CFO's financing decisions create shareholder wealth? 1b)A firm's market value of equity is $700,000. The firm's capital structure also consists of bonds

1a)How do a CFO's financing decisions create shareholder wealth?

1b)A firm's market value of equity is $700,000. The firm's capital structure also consists of bonds with a face value of $200,000, an annual coupon rate of 3% p.a., a current yield of 4% p.a., and a maturity date in five years.

What is the firm's debt ratio, based on market values?

a. 0.286

b. 0.214

c. 0.222

d. 0.273

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