Which of the Following Statements Is FALSE

question 63

Multiple Choice

Which of the following statements is FALSE?

• A)In general,the gain to investors from the tax deductibility of interest payments is referred to as the interest tax shield.
• B)The interest tax shield is the additional amount that a firm would have paid in taxes if it did not have leverage.
• C)Because Corporations pay taxes on their profits after interest payments are deducted,interest expenses reduce the amount of corporate tax firms must pay.
• D)As Modigliani and Miller made clear in their original work,capital structure matters in perfect capital markets.Thus,if capital structure does not matter,then it must stem from a market imperfection.

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Definitions:

Environmental Racism

The disproportionate impact of environmental hazards and lack of environmental benefits on minority and impoverished communities due to racial discrimination.

Corporate Welfare

Financial assistance, incentives, and benefits provided by the government to corporations and businesses, often with the intention of promoting economic growth or achieving certain policy objectives.

Resource Depletion

The exhaustion of raw materials within a region or environment as a result of human consumption and use.

Sustainability

Economic development that aims to reconcile global economic growth with environmental protection.