The Interest Tax Shield Has No Value When a Firm

question 38

Multiple Choice

The interest tax shield has no value when a firm has a:
I.tax rate of zero.
II.debt-equity ratio of 1.
III.zero debt.
IV.zero leverage.

• A)I and III only
• B)II and IV only
• C)I, III, and IV only
• D)II, III, and IV only
• E)I, II, and IV only

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Definitions:

Synthetic Division

A simplified method of dividing polynomials, especially useful for dividing by linear factors.

Divide

A mathematical operation that represents dividing one quantity by another to find out how many times the divisor fits into the dividend.

Division

Division is a fundamental arithmetic operation that divides a number (the dividend) by another (the divisor) to find a quotient, possibly with a remainder.

Division

A mathematical operation symbolized by ÷ or /, indicating the splitting of a quantity into equal parts or the process of finding how many times one number is contained into another.