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:

NMR Protons

Refers to the hydrogen atoms in a molecule that are detectable by nuclear magnetic resonance spectroscopy, providing information on molecular structure.

α-Carbon

The carbon atom adjacent to the functional group in an organic molecule, particularly significant in amino acids and carbonyl compounds.

Amines

Organic compounds and functional groups that contain a basic nitrogen atom with a lone pair, often classified as primary, secondary, or tertiary.

Base

A substance capable of accepting protons according to the Bronsted-Lowry theory or donating electron pairs in Lewis theory; it counteracts acids.