1. "Investment and financing decisions in a firm are in fact mutually dependent. To make investment decisions, managers need to determine what the target debt ratio is; conversely, to make financing decisions, managers need to know what the firm's assets will be." True or false?
2. "A higher beta for the common stock caused by an increase in the operating leverage may be offset by the decrease in the financial leverage." True or false?
3. In ENPV, if the firm cost of capital, Kc, is higher than the reinvestment rate of return, RR, the net reinvestment rate of return, NRR, would be zero and the calculated value of ENPV would be the same as NPV." True or false?
4. "Holding EBIT, tax rate, and total assets constant, the EVA is maximized if the firm is at its optimal capital structure." True or false?