Which of the Following Statements Is FALSE

question 102

Multiple Choice

Which of the following statements is FALSE?

• A)The optimal level of debt D*,balances the costs and benefits of leverage.
• B)As the debt level increases,the firm benefits from the interest tax shield (which has present value τ*D).
• C)If the debt level is too large firm value is reduced due to the loss of tax benefits (when interest exceeds EBIT),financial distress costs,and the agency costs of leverage.
• D)As the debt level increases,the firm faces worse incentives for management,which increase wasteful investment and perks.

Describe the qualifying expenses for education-related tax credits.

Discuss the purpose behind the implementation of tax credits by Congress.

Explain the qualifications for the retirement savings contributions credit.

Understand the conditions under which the foreign tax credit and adoption credit can be claimed.

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Definitions:

Employee Stock Ownership Plans

An employee benefit plan giving workers ownership interest in the company, often as a form of retirement plan.

Team Behaviours

The actions or reactions of a group working together towards a common goal.

Spot Bonus

A one-time payment given to an employee for exceptional performance, as a reward and motivation, usually without prior announcement or expectation.

Singular Effort

A term potentially referring to an individual's unique attempt or contribution toward a task or goal, emphasizing the solo nature of the endeavor.