According to the Static Trade-Off Model of Capital Structure, in a World

Multiple Choice

According to the static trade-off model of capital structure, in a world with taxes, firms have an incentive:

A) to issue debt as this will always reduce the weighted average cost of capital.
B) to issue debt until the benefits from the tax savings equals the costs of financial distress.
C) to issue less debt to reduce the costs of financial distress
D) to maximize the amount of debt.