Question $8(1$ point$)$

Assume you have two investment opportunities that return the following cash flows:

Further, assume the opportunity cost rate is positive $($e$.$g$.10\%)$ and the initial cost of

the two investments is the same as is the risk involved with each one. Which of the

two investments would be preferred from a present value standpoint?

Investment A

Investment B

Question $9(1$ point$)$

Which of the following statements regarding capital structure is false?

As debt is added to the capital structure of a for$-$profit corporation, the risk to

equity investors increases

As debt is added to the capital structure of a for$-$profit corporation, return on

equity decreases

As debt is added to the capital structure of a for$-$profit corporation, the

operating income $($EBIT$)$ available for distribution to investors increases

As debt is added to the capital structure of a for$-$profit corporation, the cost of

debt capital increases