Firm interest payments on debt are tax deductible

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Reference no: EM131916908

Consider a world in which a firm’s interest payments on debt are tax deductible. What happens? a. If there are also no financial distress costs, then firms will go to 100% leverage b. If there are also no homemade leverage costs, then firms will go to 0% leverage c. If the firm’s cash flows (EBIT) are also riskless, then firms will go to 100% leverage d. If there are financial distress costs, then firms will go to 100% leverage e. If there are homemade leverage costs, then firms will go to 100% leverage f. None of these

Reference no: EM131916908

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