CFO of Shalit Industries Plans to Have the Company Issue

question 26

Multiple Choice

CFO of Shalit Industries plans to have the company issue $300 million of new common stock and use the proceeds to pay off some of its outstanding bonds.Assume that the company, which does not pay any dividends, takes this action, and that total assets, operating income (EBIT) , and its tax rate all remain constant.Which of the following would occur?

• A)The company's taxable income would fall.
• B)The company's interest expense would remain constant.
• C)The company would have less common equity than before.
• D)The company's net income would increase.
• E)The company would have to pay less taxes.

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Definitions:

Substance Use Disorder

A medical condition characterized by an uncontrollable use of substances despite harmful consequences to one's health, relationships, and responsibilities.

Psychiatric Distress

A state of emotional suffering often associated with mental health disorders, which can include symptoms like anxiety, depression, and stress.

REBT

Rational Emotive Behavior Therapy is a psychotherapeutic approach designed to assist people in recognizing and changing their irrational beliefs to more logical and reasonable ones.

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Anxiety or unease stemming from anticipation of discomfort in either physical, emotional, or social situations.