Leverage refers to using debt to finance firm operation

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1. What amount will be required to purchase, on man’s 40th birthday, an annuity to provide him with thirty equal semi-annual of $1000 each, the first to be received on his 50th birthday, if nominal interest rate is 12% compounded semi-annually? Please Draw the cash flow diagram as well.

2. What is meant by risk/return trade-off?

3. Financial leverage refers to using debt to finance a firm’s operation. It can help or hurt a firm in long run.

True

False

Reference no: EM131865178

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