The Optimal Capital Structure Will Tend to Include More Debt

question 25

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:

Company Towns

Communities where nearly all stores, housing, and services are owned by the one company that is also the main employer.

Labor Force

The total number of people employed or seeking employment in a country or economic region.

Labor Union Members

Workers who are part of an organization that advocates for their collective bargaining rights, labor conditions, and benefits with their employers.

Labor Unions

Organizations representing the collective interests of workers, negotiating wages, benefits, and working conditions.