The Interest Tax Shield Has No Value for a Firm

Multiple Choice

The interest tax shield has no value for a firm when:
I. the tax rate is equal to zero.
II. the debt-equity ratio is exactly equal to 1.
III. the firm is unlevered.
IV. a firm elects 100% equity as its capital structure.

A) I and III only
B) II and IV only
C) I, III, and IV only
D) II, III, and IV only
E) I, II, and IV only