1. The agency problem in finance refers to:
A. whether you should finance asset purchases with debt or equity.
B. the idea that the actions of corporate managers may not be in the best interest of shareholders.
C. where to invest your portfolio.
D. how to forecast stock prices.
2. A project's cash flow will increase when:
A. the tax rate increases.
B. sales decrease.
C. depreciation expense increases.
D. earnings before interest and taxes decreases.