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Memphic Memphic
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6 years ago
Which of the following statements is FALSE?
A) The optimal level of debt D*, balances the costs and benefits of leverage.
B) As the debt level increases, the firm benefits from the interest tax shield (which has present value τ*D).
C) If the debt level is too large firm value is reduced due to the loss of tax benefits (when interest exceeds EBIT), financial distress costs, and the agency costs of leverage.
D) As the debt level increases, the firm faces worse incentives for management, which increase wasteful investment and perks.
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
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anicidanicid
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6 years ago
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Memphic Author
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6 years ago
Correct Slight Smile TY
djeghri
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Yesterday
I appreciate what you did here, answered it right Smiling Face with Open Mouth
annielin111
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2 hours ago
This helped my grade so much Perfect
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