Capital Structure Is Irrelevant If

question 36

Multiple Choice

Capital structure is irrelevant if
I.capital markets are efficient;
II.each investor can borrow/lend on the same terms as the firm;
III.there are no tax benefits to debt

• A)I only
• B)II only
• C)III only
• D)I, II, and III

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Definitions:

Net Sales

Revenue from sales after deducting returns, allowances for damaged goods, and discounts.

Income Before Taxes

Earnings of a company before income tax expense is deducted, indicating its profitability from operations.

Operating Expenses

Costs associated with running a company’s day-to-day operations, such as salaries, rent, and utilities, but not including cost of goods sold.

Cost of Goods Sold

The immediate financial outlays associated with the creation of a company's sold products.