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Home Q & A Board Other Fields Homework Help Business Finance
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Memphic Memphic
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6 years ago
Which of the following statements is FALSE?
A) Given a forecast of future interest payments, we can determine the interest tax shield and compute its present value by discounting it at a rate that corresponds to its risk.
B) The total value of the unlevered firm exceeds the value of the firm with leverage due to the present value of the tax savings from debt.
C) To compute the increase in the firm's total value associated with the interest tax shield, we need to forecast a firm's debt and its interest payments.
D) There is an important tax advantage to the use of debt financing.
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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#1
6 years ago
B
Explanation:  B) The total value of the levered firm exceeds the value of the firm without leverage due to the present value of the tax savings from debt.
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