Although the Value of an Increase in the Interest Tax

question 13

Multiple Choice

Although the value of an increase in the interest tax shield may be positive, firms are most apt to restrict borrowing if the:

• A) return on the financed project is too high.
• B) firm's asset base is largely intangible.
• C) firm's asset beta is zero.
• D)increased debt decreases the firm's WACC.