Which of the Following Statements Is False

question 91

Multiple Choice

Which of the following statements is false?

• A) A biotech firm might be developing drugs with tremendous potential, but it has yet to receive any revenue from these drugs. Such a firm will not have taxable earnings. In that case, a tax-optimal capital structure does not include debt.
• B) No corporate tax benefit arises from incurring interest payments that regularly exceed EBIT.
• C) The optimal level of leverage from a tax saving perspective is the level such that interest equals EBIT.
• D) In general, as a firm's interest expense approaches its expected taxable earnings, the marginal tax advantage of debt increases, limiting the amount of equity the firm should use.

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Definitions:

Prolonged Retention

Prolonged retention refers to the ability to maintain information in memory over extended periods of time.

Conscious Effort

The deliberate use of one's attention and energy to perform a specific task.

Consolidation

The process by which memories become stable in the brain; a process believed to be linked with sleep.

Declarative Memories

Memories that can be consciously recalled, such as facts and events, and are part of the explicit memory system.