Asked by VALERIA BARDALES on May 09, 2024
Verified
Tax rate will affect the optimal level of debt for a firm.
Tax Rate
The amount of tax a person or company must pay, expressed as a percentage of income.
Optimal Level
The most efficient, effective, or desirable point or degree for a specific outcome or condition.
- Identify the various factors affecting the optimal level of debt for a firm.
Verified Answer
SS
Sanket SheladiyaMay 12, 2024
Final Answer :
True
Explanation :
The tax shield benefit from debt interest payments can make debt financing more attractive, thus affecting the optimal level of debt a firm might choose to maintain.
Learning Objectives
- Identify the various factors affecting the optimal level of debt for a firm.