Although the Use of Debt Provides Tax Benefits to the fiRm

Multiple Choice

Although the use of debt provides tax benefits to the firm, debt also puts pressure on the firms to:

A) meet interest and principal payments which, if not met, can put the company into financial
Distress.
B) make dividend payments which if not met can put the company into financial distress.
C) meet both interest and dividend payments which when met increase the firm cash flow.
D) meet increased tax payments thereby increasing firm value.
E) None of the above.