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Exam Code: 220-1001
Exam Name: CompTIA A+ Certification Exam: Core 1
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NEW QUESTION: 1
Which of the following are practical difficulties associated with capital structure and degree of leverage analyses?
A. Managers' attitudes toward risk differ and some managers may set a target capital structure other than the one that would maximize stock price.
B. None of the statements represent a serious impediment to the practical application of leverage analysis in capital structure determination.
C. All of these statements are correct.
D. Managers often have a responsibility to provide continuous service; they must preserve the long-run viability of the enterprise. Thus, the goal of employing leverage to maximize short-run stock price and minimize capital cost may conflict with long-run viability.
E. It is nearly impossible to determine exactly how P/E ratios or equity capitalization rates are affected by different degrees of financial leverage.
Two projects being considered are mutually exclusive and have the following projected cash flows:
Year Project AProject B
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