Which of the Following Statements Is FALSE

question 52

Multiple Choice

Which of the following statements is FALSE?

• A)A biotech firm might be developing drugs with tremendous potential,but it has yet to receive any revenue from these drugs.Such a firm will not have taxable earnings.In that case,a tax-optimal capital structure does not include debt.
• B)No corporate tax benefit arises from incurring interest payments in excess of EBIT.
• C)The optimal level of leverage from a tax saving perspective is the level such that interest equals EBIT.
• D)In general,as a firm's interest expense approaches its expected taxable earnings,the marginal tax advantage of debt increases,limiting the amount of equity the firm should use.

---

Definitions:

Emotional Intelligence

The capability to recognize, understand, manage, and reason with emotions in oneself and others, crucial for effective interpersonal relations.

Cross-Culturally Sensitive

Showing an awareness of, respect for, and consideration towards the differences and similarities across cultures.

Social Awareness

The ability to understand and respond to the needs of others and the dynamics of social situations.

Internal Locus Control

A psychological concept referring to individuals who believe they have control over the outcomes of their actions, as opposed to external forces being in control.