Question 3 (2 points)

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?

Question 3 options:

	Management believes that the firm's stock is currently overvalued.
	The bankruptcy laws are changed in a way that would make bankruptcy more costly to the firm and its stockholders.
	The corporate tax rate is increased.
	The firm decides to automate its factory with specialized equipment and thus increase its use of operating leverage.
	Its sales are projected to become less stable in the future.