A Company Has a Tax Rate of 40

question 21

Short Answer

A company has a tax rate of 40%.Leverage would be beneficial for the company for each of the following combinations of interest rates and ROA except:
$$\begin{array} { | l | c | c | } \hline & \begin{array} { c } \text { Interest } \\\text { rate }\end{array} & \text { ROA } \\\hline \text { a. } & 4 \% & \mathbf { 6 \% } \\\hline \text { b. } & \mathbf { 6 \% } & \mathbf { 6 } \% \\\hline \text { c. } & 14 \% & 10 \% \\\hline \text { d. } & 16 \% & 10 \% \\\hline\end{array}$$

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Definitions:

Conformity

Conformity is the act of aligning one's beliefs, attitudes, and behaviors with those of a group or societal norms, often due to real or perceived group pressure.

Cognitive Dissonance

The psychological discomfort experienced from holding two or more conflicting beliefs, values, or attitudes.

Contradictory Cognitions

Holding two or more psychological beliefs, ideas, or values that are in conflict with one another.

Social Norms

The unwritten rules that govern the behavior of individuals within a society, guiding what is considered acceptable or unacceptable.