Which One of the Following Statements Is Correct

question 7

Multiple Choice

Which one of the following statements is correct?

• A) The greater the volatility of EBIT, the more a firm should borrow.
• B) Firms with a large percentage of assets invested in intangibles, should borrow more than a comparable firm with a minimal investment in intangibles.
• C) A firm with a high annual depreciation write-off benefits more from leverage than a comparable firm with a low annual depreciation write-off.
• D) The static model of capital structure identifies the precise debt-equity ratio that optimizes the value of the firm.
• E) Firms with high tax rates have a greater incentive to borrow than firms with low tax rates.

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