1. The procurement contract on the rolling stock led to uncontrolled cost increases because:

a. The banks did not hold TML responsible for any cost risk.

b. Eurotunnel was unfamiliar with the procurement of rolling stock.

c. Eurotunnel single-sourced instead of multi-sourced the initial bid.

d. Eurotunnel put excessive specifications for the rolling stock in its contract.

e. The procurement contract failed to lay out the “rights, responsibilities, and duties of the parties to the contract."

2. By increasing debt in your company's capital structure, you are increasing your tax shield, but also increasing your financial distress costs.

True / False

3. Assuming there are no taxes and you can borrow and lend at the same rate as the firm, then the firm capital structure is irrelevant because you can use "homemade" leverage.

True / False