4. Depreciation, like interest payments is a tax shield, i.e., a charge that firms can deduct from their taxable earnings. Depreciation represents the decline the value of the firms capital stock (e.g. equipment) caused by the passage of time. From the perspective of trade-off (tax/financial distress) theory, everything else held equal, should firms with a lot of deprecation tax shields have higher or lower leverage ratios?. Please answer this question in 100 words or less