Corporations that are heavily committed to investments in fixed assets that are expected to produce cash flow over many years generally favor long-term debt to the extent that they borrow.

Question

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Corporations with long-term assets that produce cash flow over many years would prefer long-term debt as it provides a stable source of financing with lower interest rates compared to short-term debt. This allows the corporation to meet its long-term financial obligations while maintaining optimal capital structure.

Corporations That Are Heavily Committed to Investments in Fixed Assets