Which of the following would likely encourage a firm to increase the debt in its capital structure?
Question:
a. The corporate tax rate increases.
b. The personal tax rate increases.
c. Due to market changes, the firm’s assets become less liquid.
d. Changes in the bankruptcy code make bankruptcy less costly to the firm.
e. The firm’s sales and earnings become more volatile.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 35% (14 reviews)
a An increase in the corporate tax rate would encourage a firm to increase the amount of debt in its ...View the full answer
Answered By
Ehsan Mahmood
I’ve earned Masters Degree in Business Studies and specialized in Accounts & Finance. Couple with this, I have earned BS Sociology from renowned institute of Pakistan. Moreover, I have humongous teaching experience at Graduate and Post-graduate level to Business and humanities students along with more than 7 years of teaching experience to my foreign students Online. I’m also professional writer and write for numerous academic journals pertaining to educational institutes periodically.
4.90+
248+ Reviews
287+ Question Solved
Related Book For
Fundamentals of Financial Management
ISBN: 978-0324664553
Concise 6th Edition
Authors: Eugene F. Brigham, Joel F. Houston
Question Posted:
Students also viewed these Corporate Finance questions
-
Which of the following would be expected to give a positive test with Benedicts reagent? Why? (a) D-Galactitol (see structure in margin) (d) D-Fructose (b) L-Arabinose (e) Lactose (c) 1,...
-
Which of the following would not overstate current- period net income? a. Capitalizing an expenditure that should be expensed. b. Failing to record a liability as an expense. c. Failing to record a...
-
Which of the following would not be an appropriate heading for a column in the cash receipts journal? a. Cash b. Accounts Payable c. Sales Discounts d. Sales
-
Kenneth Tully and Toby Benning began a new consulting business on January 1, 2020. They organized the business as a C corporation, KT, Inc. During 2020, the corporation was successful and generated...
-
From an ethical point of view, is there any difference between managers calling subordinates during off hours for work-related questions and sending e-mails or text messages?
-
Botticelli SpA was organized in late 2019 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported...
-
How Do Theories and Models Explain Management and Leadership? (pp. 4549)
-
A corporation may use stock splits and stock dividends to change the number of shares of its stock outstanding. Required: a. What is meant by a stock split effected in the form of a dividend? b. From...
-
LOMAT - Module 9 - Question - Happy Attorneys You are employed at Happy Attorneys as an Associate, fresh out of EDLS, hence the senior Partner asked you to help the Accounts Officer with preparing...
-
Browns, a local bakery, is worried about increased costs particularly energy. Last years records can provide a fairly good estimate of the parameters for this year. Wende Brown, the owner, does not...
-
WIf Congress increased the personal tax rate on interest, dividends, and capital gains but simultaneously reduced the rate on corporate income, what effect would this have on the average companys...
-
Why do public utilities generally use different capital structures than pharmaceutical companies?
-
The purpose of this exercise is to provide practice using the LINGO or Excel solvers. Find the values of X and Y that minimize the function Min X2 - 4X + Y2 + 8Y + 20 Do not assume nonnegativity of...
-
Given below is some is a comparison of financial performance data of a project when flexibility is incorporated (I.e. flexible project) in comparison to when it is not. (i.e. inflexible project) The...
-
For Service Zone H, assuming your shipment chargeable weight is between 100 and 300 kg, at what weight does it become cheaper to declare the shipment weight to be 300 kg.? EG: What is the rate break...
-
Gold Dust Ltd has produced the following budgeted data for its current financial year:- Sales 2900000 Direct materials 400000 Direct labour 500000 Production overhead 1200000 Production cost 2100000...
-
Critical Review V Hide Assignment Information Instructions Williams, A. (2012). Worry, intolerance of uncertainty, and statistics anxiety. Click on the following link to retrieve the article....
-
(4.) Octopussy Company uses a predetermined overhead rate in applying overhead to production orders on a labor-cost basis for Dept. A and on a machine-hour basis for Dept. B. At the beginning of...
-
How do governments attempt to control the use of the Internet? AppendixLO1
-
Modify the counter from Exercise 5.44 such that the counter will either increment by 4 or load a new 32-bit value, D, on each clock edge, depending on a control signal Load. When Load = 1, the...
-
How have the attributes of very high performance systems (a.k.a. supercomputers) changed over the third, fourth, fifth, and sixth generations of computing?
-
Define cash conversion cycle (CCC). Explain why, holding other things constant, a firms profitability would increase if it lowered its CCC.
-
What are the four key factors in a firms credit policy? How would an easy policy differ from a tight policy? Give examples of how the four factors might differ between the two policies. How would the...
-
Indicate using a (+), (-), or (0) whether each of the following events would probably cause accounts receivable (A/R), sales, and profits to increase, decrease, or be affected in an...
-
As a Financial Analyst in the Finance Department of Zeta Auto Corporation they are seeking to expand production. The CFO asks you to help decide whether the firm should set up a new plant to...
-
Chapter 4 When an Auditor finds misstatements in entities financial statements which may be the result of fraudulent act, what should be the role of an auditor under that situation? (2 Points)
-
Suppose the following input prices are provided for each year: Required: $
Study smarter with the SolutionInn App