1. A corporation with positive free cash flows may use the cash flows to:

pay stock dividends

repurchase shares

retire debt

all of the above

2. Create a break-even graph using the following:

a. Fixed expenses of $25,000

b. Variable Expense:

i. Labor: $0.25 ea. ii. Materials: $0.35 ea. iii. Profit: $0.50 c. Price: $5.00

3. If a firm has no debt, the equity multiplier will be equal to 1. As the firm issues more debt, the equity multiplier will get smaller and be less than 1.0.

True

False