Multiple Choice
According to the trade-off theory, under which of the following conditions will a firm's capital structure be optimal?
A) Marginal bankruptcy-related costs = 0
B) Marginal tax shelter benefits - Marginal bankruptcy-related costs = Interest charges
C) Debt/assets ratio = Marginal tax shelter benefits
D) Marginal tax shelter benefits = Marginal bankruptcy-related costs
E) Marginal tax shelter benefits = Interest charges
Correct Answer:
Verified
Correct Answer:
Verified
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