Service companies, in particular, find great value from ABC because a vast majority of their cost structure is composed of ________ costs

Which of the following statements about the Linton yield is (are) true?

I. It is based on the assumption that a cash-value policy can be viewed as a combination of insurance protection and a savings fund. II. It is the average compound annual rate of return required to make the savings deposits in a life insurance policy equal to the policy's guaranteed cash value at the end of a specified period. A) I only B) II only C) both I and II D) neither I nor II

Mechano Construction Inc generates perpetual annual EBIT of $500. The corporate tax rate is 35%. Mechano has 300 shares outstanding that trade for $6.89. Mechano has debt worth $1,512 and its debt-to-equity ratio is 0.667

The CFO of Mechano is thinking about borrowing another $100 to repurchase shares. However, the additional debt will increase the present value of financial distress costs by $40. The CFO wants to maximize the value of the firm. What is the benefit of the additional debt minus the cost of the additional debt? A) -$5 B) $0 C) $5 D) $35 E) $40