I am re-posting these 2 multiple choice questions because I got different answers from different tutors, so I don;t know who to believe...

2.All else the same, the level of external financing needed (EFN) increases with increases in the:

A.Profit margin.

B.Retention ratio.

C.Accounts receivable turnover ratio.

D.Capital intensity ratio.

E.Fixed asset utilization ratio.

6.When a firm is operating with the optimal capital structure:

I. the debt-equity ratio will also be optimal.

II. the weighted average cost of capital will be at its minimal point.

III. the required return on assets will be at its maximum point.

IV. the increased benefit from additional debt is equal to the increased bankruptcy costs of that debt.

A.I and IV only

B.II and III only

C.I and II only

D.II, III, and IV only

E.I, II, and IV only