The Interest Tax Shield Has No Value for a Firm

question 10

Multiple Choice

The interest tax shield has no value for a firm when the
I.tax rate is equal to zero.
II.debt-equity ratio is exactly equal to 1.
III.firm is unlevered.
IV.firm elects an all-equity capital structure.

• A)I and III only
• B)II and IV only
• C)I,III,and IV only
• D)II,III,and IV only
• E)I,II,and IV only

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Definitions:

Andrew Jackson

The seventh President of the United States (1829–1837) known for his populist policies and for being the founder of the Democratic Party.

Spoils System

A practice where government jobs are given to political supporters and friends, often criticized for rewarding loyalty over merit.

Public Office

An elected or appointed position within the government where individuals are chosen to represent, govern, or administrate public policy and services.

Abraham Lincoln

The 16th President of the United States who served from 1861 to 1865 and led the country through the Civil War while abolishing slavery with the Emancipation Proclamation and the 13th Amendment.