Other Things Held Constant,which of the Following Events Would Be

question 17

Multiple Choice

Other things held constant,which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure?

• A) Its sales are projected to become less stable in the future.
• B) The bankruptcy laws are changed in a way that would make bankruptcy more costly to the firm and its stockholders.
• C) Management believes that the firm's stock is currently overvalued.
• D) The firm decides to automate its factory with specialized equipment and thus increase its use of operating leverage.
• E) The corporate tax rate is increased.