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:

Necessity-based Entrepreneur

An individual who starts a business out of necessity, often due to the lack of employment opportunities.

Necessity-based Entrepreneurship

Entrepreneurial activities initiated out of a need rather than a desire for opportunity, often due to lack of traditional employment options.

Public Waste Management

involves the systems and processes in place to handle, treat, and dispose of waste generated by the public in an environmentally responsible manner.

Business Expertise

The specialized knowledge or skills in managing and operating a business efficiently and effectively.