The Interest Tax Shield Has No Value When a Firm

question 6

Multiple Choice

The interest tax shield has no value when a firm has:
i.no taxable income.II.debt-equity ratio of 1.III.zero debt.IV.no leverage.

• A) I and III only
• B) II and IV only
• C) I,III,and IV only
• D) II,III,and IV only
• E) I,II,and IV only

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Definitions:

Demand

The quantity of a product or service that consumers are willing and able to purchase at a given price.

Profit

The financial gain made in a transaction or business operation, calculated as the difference between revenue and costs.

Positive Profits

When a company's total revenue exceeds its total costs, resulting in a financial gain.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a specified time period.