1. A manager should attempt to maximize the value of the firm by changing the capital structure if and only if the value of the firm increases:

A. as a result of the change.

B. to the sole benefit of the managers.

C. to the sole benefit of the debtholders.

D. while also decreasing shareholder value.

E. while holding stockholder value constant.

2. The _________________________ technique uses compounding to measure the value of cash flows as of the end of a project’s life.

A. future value

B. present value

C. perpetuity

D. debenture