1. An increase in fixed costs ___________________________ variable costs
2. An increase in the payback period ______________________ the attractiveness of an investment.
3. A decrease in fixed costs ___________________________ the break-even level of output
4. An increase in the number of units sold ______________________ fixed costs of production.
5. An increase in operating leverage ______________________ risk
6. If a firm issues bonds, financial leverage ________________________ .
7. Increases in the debt ratio imply ____________________ in the use of financial leverage.
8. An increase in the tax rate ______________________ the cost of debt
9. An increase in interest rates ______________________ the cost of capital.
10. Moving toward the firms optimal capital structure should __________________ the value of the firm.
11. An increase in interest rates _________________ net present values.
12. Increased taxes may result from a _______________________ in depreciation.
13. Cash flow that occurs at the beginning of the year instead of the end of the year ______________ the IRR.
14. A decrease in the cost of an investment _________________________ an investments IRR.