A firm should agree to whatever restrictive covenants will achieve the lowest interest cost for its debt.

A firm should agree to whatever restrictive covenants will achieve the lowest interest cost for its debt.

a.no, opportunity costs, such as causing the firm to forego a positive-NPV investment, can more than offset the lower interest cost

b.yes, the interest cost will be fixed for the life of the debt and offers a positive riskless return

c.no, the interest savings may not be worth the cost

d.yes, if the firm is going to borrow, the lower the interest cost the better

e.A and B

f.A and C

g.A and D

h.B and C

i.B and D

j.C and D

k.all but A

l.all but B

m.all but C

n.all but D

o.all are true

p.none are true