In a World with Corporate Taxes but No Possibility of Financial

question 88

Multiple Choice

In a world with corporate taxes but no possibility of financial distress,the value of the firm is maximized when the:

• A) firm uses no debt in its capital structure.
• B) firm uses the maximum amount of debt in its capital structure.
• C) firm uses a debt-equity ratio of 1.0.
• D) corporate tax rate approaches 100%.

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Definitions:

Percentage

A percentage is a fraction or ratio expressed as a part of 100, commonly used to quantify or compare parts of a whole.

Cross-Classification Table

A tabular method used to organize data according to two or more categories or variables, facilitating the analysis of the relationship between them.

Bar Charts

A visual representation of data using bars of varying heights or lengths to compare different categories.

Pet Ownership

The act of owning and being responsible for the welfare of domesticated animals such as dogs, cats, or birds.