The Optimal Capital Structure Will Tend to Include More Debt

question 253

Multiple Choice

The optimal capital structure will tend to include more debt for firms with:

• A) The highest depreciation deductions.
• B) The lowest marginal tax rate.
• C) Substantial tax shields from other sources.
• D) Lower probability of financial distress.
• E) Less taxable income.

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Definitions:

Administrative Issues

Concerns related to the management, organization, and operation of a business or institution.

Advanced Technology

Cutting-edge or highly developed tools, equipment, and processes that offer superior performance or capabilities.

Basic Skills

Basic skills are fundamental abilities such as reading, writing, math, and communication that individuals need to function effectively in society and the workplace.

Malcolm Baldrige

Namesake of the Malcolm Baldrige National Quality Award, recognizing U.S. organizations for performance excellence.