Taggart Technologies Is Considering Issuing New Common Stock and Using

question 52

Multiple Choice

Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt.The stock issue would have no effect on total assets,the interest rate Taggart pays,EBIT,or the tax rate.Which of the following is likely to occur if the company goes ahead with the stock issue?

• A) The ROA will decline.
• B) Taxable income will decline.
• C) The tax bill will increase.
• D) Net income will decrease.
• E) The times-interest-earned ratio will decrease.

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Definitions:

Piperidine

An organic compound, a nitrogenous six-membered ring, used as a building block in the synthesis of pharmaceuticals and other organic compounds.

Structure

The arrangement of atoms within a molecule that determines its shape and properties.

3-pentanamine

An organic compound, specifically an amine with the formula C5H11NH2, featuring an amino group attached to the 3rd carbon of a pentane chain.

Structure

The arrangement of atoms within a molecule, defining its chemical properties and behavior.