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.

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Definitions:

Nuclear Family

A family group consisting of parents and their children, without extended relatives.

Potlatch

A ceremonial feast among indigenous peoples of the Pacific Northwest with social, cultural, and economic functions, including the redistribution and reciprocity of wealth.

Modern-Day Equivalent

An updated or contemporary version that serves the same purpose or fulfills the same role as something from the past.

Low-Status Ethnic Group

A low-status ethnic group is regarded as having less power, privilege, and social standing compared to other ethnic groups within a society.