Which One of the Following Is a Safe Assumption for a Firm

question 16

Multiple Choice

Which one of the following is a safe assumption for a firm in which the PV of the tax shield is approximately equal to the PV of the financial distress costs?

• A) The tax shield has been calculated incorrectly.
• B) The firm is too heavily levered.
• C) The firm has reached its optimal debt level.
• D)The firm appears to have a low risk of financial distress.

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