Question: 1.Why are debt ratios an important consideration relating to a company's WACC? Give examples of two debt ratios and the impact they might have on

1.Why are debt ratios an important consideration relating to a company's WACC? Give examples of two debt ratios and the impact they might have on capital structure.

2.How is the market risk premium affected by beta and future expectations of market conditions? Why is it so important to come up with an accurate estimate of the market risk premium?

3.Explain how each of the following factor into the decision to use debt financing or equity financing:Current Capital Structure,Consistency of Cash Flows,and Bond Rating & Yield on Long-Term Debt.

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