If a Eugenie finances her firm with equity rather than debt, her net profits could potentially be greater because

Question

Quizplus · Accepted Answer

If Eugenie finances her firm with equity rather than debt, there is no interest expense which means her net profits would be greater. Interest expense is a cost to the firm that reduces net profits, which is not the case with equity financing. However, the other options given in the question are not necessarily true and cannot be chosen as the best choice without additional information.

If a Eugenie Finances Her Firm with Equity Rather Than