The Optimal fiRm Value Is Achieved When The

question 243

Multiple Choice

The optimal firm value is achieved when the:

• A) Present value of the bankruptcy cost is minimized.
• B) The interest tax shield on debt is maximized.
• C) Weighted average cost of capital is minimized.
• D) Debt-equity ratio is maximized.
• E) Total net gain from leverage is equal to zero.

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Definitions:

Marginal Means

The mean scores for each level of a factor averaged over the levels of other factors in a multifactorial experiment, often used in the analysis of variance.

Significant Main Effect

An outcome in statistical analysis indicating that the independent variable has a statistically meaningful impact on the dependent variable.

Variable

Property or characteristic of an object, event, or person that can take on different values.

Marginal Means

Means for each level of an independent variable, averaging over the levels of any other independent variables.