Although the Value of an Additional Interest Tax Shield May

question 63

Multiple Choice

Although the value of an additional interest tax shield may be positive,firms may restrict borrowing if:

• A) the returns on the project are too high.
• B) their asset base is largely intangible.
• C) their asset beta is zero.
• D) the borrowing increases their WACC.

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Definitions:

Harm

Damage or injury that affects someone or something in a negative way, including physical, psychological, financial, or reputational impacts.

Inherently Dangerous

Activities or conditions that carry a significant risk of harm to people or property by their nature.

Dynamite Blasting

The use of explosives, specifically dynamite, to break up or remove rock and other materials.

Strict Liability

A legal doctrine that holds an individual or entity responsible for their actions or products without the need to prove negligence or fault.