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:

Same Discipline

This term does not appear to be a recognized key term in the context provided, thus a definition cannot be given. NO.

Explanation

A statement or account that makes something clear or comprehensible.

Management

The process of planning, organizing, directing, and controlling resources efficiently to achieve objectives.

Managerial Task

Involves responsibilities that a manager needs to perform, which may include planning, organizing, leading, and controlling an organization's resources.