Multiple Choice
The interest tax shield is a key reason why
A) the value of an unlevered firm is equal to the value of a levered firm.
B) the net cost of debt to a firm is generally less than the cost of equity.
C) firms tend to minimize their borrowing.
D) the cost of debt is equal to the cost of equity for a firm with a debt-to-equity ratio of 1.
E) firms prefer equity financing over debt financing.
Correct Answer:
Verified
Correct Answer:
Verified
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