question archive Which of the following statements in relation to capital structure and interest tax shields is less likely to be true? O a
Which of the following statements in relation to capital structure and interest tax shields is less likely to be true? O a
Subject:FinancePrice: Bought3
Which of the following statements in relation to capital structure and interest tax shields is less likely to be true?
O a. The value of interest tax shields is determined only by the level of borrowings, the term and the interest rate
O b. Although higher debt levels will result in higher interest tax shields, the likely costs of financial distress will limit the borrowings offered to a firm by banks
O C. The appropriate discount rate to value future tax shields should be the borrowing rate
O d. The financing of operating assets with borrowings will result in an interest expense which is deductible for tax purposes
O e. Interest on borrowings to finance operating assets is likely to result in a tax shield if a company's return on assets exceeds the interact rate on the borrowings
