Blank response answer choices:
1) assets other than the equipment bought / the equipment itself
2) lower earnings that will decrease / higher earnings that will increase
3) issue a public offering of long-term bonds / get a term loan or a private placement
Homework Answers
Answer-1-suppose a comapany bought equipment with a 10 year life. If it took a 30-year debt to finance the equipment , then it would have to pay off its debt with cash flows generated from ASSETS OTHER THAN THE EQUIPMENT BOUGHT.
2-A firm is likely to use short-term debt when managers expect higher earnings that will increase the value of the firm's stock.
3-if the amount of financing required is relatively small, the company is likely to get a term loan or a private placement.
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Blank response answer choices:
1) assets other than the equipment bought / the equipment
itself
2)...
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