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Other things held constant, which of the following events would be most likely to encourage a firm to increase the amount of debt in its
Other things held constant, which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure?
a. | Its sales are projected to become less stable in the future. | |
b. | The corporate tax rate is increased. | |
c. | Management believes that the firm's stock is currently overvalued. | |
d. | The firm decides to automate its factory with specialized equipment and thus increase its use of operating leverage. | |
e. | The bankruptcy laws are changed in a way that would make bankruptcy more costly to the firm and its stockholders. |
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