Taggart Technologies Is Considering Issuing New Common Stock and Using

question 52

Multiple Choice

Taggart Technologies is considering issuing new common stock and using the proceeds to reduce its outstanding debt.The stock issue would have no effect on total assets,the interest rate Taggart pays,EBIT,or the tax rate.Which of the following is likely to occur if the company goes ahead with the stock issue?

• A) The ROA will decline.
• B) Taxable income will decline.
• C) The tax bill will increase.
• D) Net income will decrease.
• E) The times-interest-earned ratio will decrease.

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Definitions:

Ethical Concern

A moral issue or problem that requires a person or organization to consider what is right and wrong in their conduct.

Milgram Studies

A series of social psychology experiments conducted by Stanley Milgram, which measured the willingness of study participants to obey an authority figure who instructed them to perform acts conflicting with their personal conscience.

Psychological Study

An academic and practical discipline involving the scientific investigation of mental functions and behaviors.

Inconsistent Position

Implies a stance or viewpoint that lacks harmony or uniformity in its arguments or propositions, often leading to uncertainty or confusion.