Which of the Following Statements Is FALSE

question 42

Multiple Choice

Which of the following statements is FALSE?

• A)Personal taxes have the potential to offset some of the corporate tax benefits of leverage.
• B)The actual interest tax shield depends on the reduction in the total taxes (both corporate and personal)that are paid.
• C)The amount of money an investor will pay for a security ultimately depends on the benefits the investor will receive-namely,the cash flows the investor will receive before all taxes have been paid.
• D)Just like corporate taxes,personal taxes reduce the cash flows to investors and diminish firm value.

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