If a Firm That's Doing Very Well Pays the Same

question 144

Multiple Choice

If a firm that's doing very well pays the same return to equity and debt shareholders, and needs to raise more money, it may be wise to use debt because:

• A)interest is tax deductible resulting in a lower cost to the firm.
• B)Equity is the less desirable source of capital.
• C)borrowing is always less of an effort than raising additional equity capital.
• D)All of the above

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Definitions:

Capillaries

The smallest blood vessels in the body, responsible for the exchange of various substances between the blood and surrounding tissues.

Gases

States of matter consisting of particles that have neither a defined volume nor shape, expanding to fill their container.

Exhalation

The process of releasing air from the lungs through the respiratory tract; a key part of the breathing cycle in aerobic respiration.

Bronchi

The main passageways directly attached to the lungs that allow the passage of air in and out of the lungs.