A firm with many future investment projects should

A) borrow as much as possible now so that it can raise equity later

B) only use debt and exhaust reserve borrowing capacity because debt is the cheapest source of capital

C) always pay as much dividends as possible so that it can borrow cheaply to finance investment projects

D) maintain some reserve borrowing capacity so that it can borrow in the future when funds are needed

2. Which of the following is NOT associated with (or does not contribute to) business risk? Recall that business risk is affected by a firm's operations.

A) Input price variability

B) The extent to which operating costs are fixed

C) Sales price variability

D) The extent to which interest rates on the firm's debt fluctuate