Biology Forums - Study Force

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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