1. Which of the following would increase a firm's net cash flow?
2. A firm issues $100 million of new long-term bonds. These bonds have a coupon interest rate of 5%. Which of the following statements must be true if the firm uses all of the money raised to repurchase shares of its own common stock? Assume that the firm's (net) profit margin remains positive. 1. The firm's TIE will increase; 2. The firm's ROA will decrease; 3. The firm's EM (equity multiplier) will decrease
3. Which of the following would make it less likely that a corporation would choose to call its outstanding callable bonds and replace them with newly issued bonds? {The bonds were issued 12 years ago and will mature in 20 years. Assume that the bonds sold at par when issued and that the firm's total assets and debt ratio will remain constant.} 1. The rate of inflation has changed from 14% to 4% over the last ten years; 2. The firm's TIE ratio has changed from 3.0 to 12.0 over the last ten years; 3. The firm's BEP has changed from 20% to 5%