The Interest Tax Shield Has No Value for a Firm

question 52

True/False

The interest tax shield has no value for a firm when the debt-equity ratio is exactly equal to 1.

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Definitions:

General Motors

An American multinational corporation that designs, manufactures, markets, and distributes vehicles and vehicle parts.

Sit-Down Strike

A form of protest where workers physically occupy their place of employment without working, thereby halting production as a bargaining strategy.

Unionization

The process by which workers organize themselves into a union to collectively bargain for better wages, benefits, and working conditions.

Strike Activity

The act of workers ceasing work and forming picket lines outside their place of employment as a form of protest, usually to secure better wages, working conditions, or benefits.