A Company That Is Capital Intensive Does Which of the Following

question 132

Multiple Choice

A company that is capital intensive does which of the following?

• A)has an altered fiscal strategy for overseas operations
• B)spends more on equipment than on labour
• C)makes better use of benchmarking than other types of business
• D)creates employment monopolies

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Definitions:

M&M Proposition I

A principle of corporate finance stating that in a world without taxes, transaction costs, and bankruptcy costs, and in an efficient market, a firm's value is unaffected by its financing decisions.

Leverage

The use of borrowed funds to increase the potential return of an investment or project.