Which of the Following Is NOT a Factor Offsetting the Tax

question 52

Multiple Choice

Which of the following is NOT a factor offsetting the tax advantage of debt as a source of financing?

• A) increased agency costs
• B) increased probability of financial distress (bankruptcy) due to fixed interest payments
• C) alternative tax shields to those supplied by interest payments
• D) All of the above offset the tax advantage of debt as a source of financing.

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Definitions:

Carbon

A chemical element with the symbol C, essential to all known life, capable of forming a vast number of compounds including CO2 and organic materials.

Peatbogs

A type of wetland ecosystem characterized by the accumulation of acidic peat, a deposit of dead plant material, often moss.

Arctic

A polar region located at the northernmost part of Earth, characterized by extreme cold, ice-covered seas, and unique ecosystems adapted to cold environments.

Soils

The top layer of the earth's surface, composed of mineral particles, organic matter, water, and air, and capable of supporting plant life.