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1. When a firm uses a permanent debt, the present value of the associated interest tax shield:

A) increases with the interest rate of the debt.

B) decreases with the interest rate of the debt.

C) does not depend on the interest rate of the debt.

D) does not depend on the interest rate of the debt only if the debt is risk free

2. A simple loan payable in 2 years has a repayment amount equal to $132.25 and a loan value of $100. Its yield to maturity is

A) 5 percent.

B) 20 percent.

C) 33.3 percent.

D) 15 percent.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92317973

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