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This is a test of your comprehension of the key concepts covered in this section of the course. In writing your essay assume you are writing for someone who knows nothing about the subject. Tell them what they need to know in order to understand the concept. Illustrate the point with an ex showing the idea in action.

1.) What is meant by saying debt is tax-favored? What is the benefit to the firm? What are the risks? (do the math)

This only needs to be a 1 page essay (Note) The paper needs to know 3 things: what it is (definition), how does it work, and why does it matter? Needs to be like describeing it to your mother.

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