Maintaining certain amount of debt on their balance sheets

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Reference no: EM13940407

Which of the following statements is false?

A. Given a 35% corporate tax rate, for every $1 in new permanent debt that the firm issues, the value of the firm increases by $0.65.

B. The firm’s marginal tax rate may fluctuate due to changes in the tax code and changes in the firm’s income bracket.

C. Many large firms have a policy of maintaining a certain amount of debt on their balance sheets.

D. Typically, the level of future interest payments varies due to changes the firm makes in the amount of debt outstanding, changes in the interest rate on that debt, and the risk that the firm may default and fail to make an interest payment.

Reference no: EM13940407

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