Problem
1). Why should a firm's ability to use tax credit affect its capital structure?
2). Briefly describe our three-step approach to the dividend decision.
3). (a). Describe the difference between secured and unsecured debt.
(b). Explain the role of debt covenants, and cite three examples.
(c). On what basis would a firm ideally choose the maturity of its debt?
4). Does a CFO prefer a higher, or lower weighted average cost of capital (WACC)? 5). Why?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.