Which of the Following Is NOT a Factor Offsetting the Tax

question 23

Multiple Choice

Which of the following is NOT a factor offsetting the tax advantage of debt as a source of financing?

• A)Increased agency costs.
• B)Increased probability of financial distress (bankruptcy)due to fixed interest payments.
• C)Alternative tax shields to those supplied by interest payments.
• D)All of the above offset the tax advantage of debt as a source of financing.

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Definitions:

Mortgage Payment

Periodic payments made by a borrower to a lender, typically comprising both principal and interest, for the repayment of a mortgage loan.

Cause of Action

A set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party.

Breach of Contract

The failure to perform any term of a contract, written or verbal, without a legitimate legal excuse.

Intended Beneficiary

An individual or group for whom a contract is specifically designed to benefit.