Which of the
following statements is the most
accurate about the impact of an increase in leverage on a firm’s free cash
flow to equity (FCFE)?

Question

Which of the
following statements is the  most 
accurate  about the impact of an increase in leverage on a firm’s free cash
flow to equity (FCFE)?

Answer

Current year
FCFE increases, but future FCFE will decrease.

Answer

Current year
FCFE decreases, but future FCFE will increase.

Answer

FCFE is
unaffected by changes in leverage.

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