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Memphic Memphic
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6 years ago
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.
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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EgorGruzdevEgorGruzdev
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6 years ago
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Memphic Author
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6 years ago
Thanks
GeorgeNeist
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Yesterday
Helped a lot
shelbycox
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2 hours ago
You make an excellent tutor!
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