Multiple Choice

a. more long-term solvency risk than

b. the same long-term solvency risk as

c. less interest expense than

d. less long-term solvency risk than

e. a lower market value of equity to book value of equity ratio than

Interest is Big Valley's only fixed cash charge. Big Valley's market value of equity to book value of debt ratio =1.5. Big Valley's use of debt to finance assets indicates that Big Valley has the typical firm in the industry