Taggart Technologies Is Considering Issuing New Common Stock and Using

question 23

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) The tax bill will increase.
• C) Net income will decrease.
• D) The times-interest-earned ratio will decrease.

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Definitions:

Project Manager

A professional responsible for planning, executing, monitoring, controlling, and closing projects while managing the team and resources to achieve project goals.

Sensing Types

Personality traits or preferences that focus on gathering information through the five senses, a concept often discussed in Myers-Briggs type indicators.

Myers-Briggs Type Indicator

A psychometric tool designed to measure psychological preferences in how people perceive the world and make decisions, resulting in a 16-type typology.

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