Although the value of an additional interest tax shield may be positive,firms may restrict borrowing if:
A) the returns on the project are too high.
B) their asset base is largely intangible.
C) their asset beta is zero.
D) the borrowing increases their WACC.

Question

Quizplus · Accepted Answer

Firms with largely intangible assets may restrict borrowing because intangible assets are harder to use as collateral, increasing the risk for lenders and potentially leading to higher borrowing costs.

Although the Value of an Additional Interest Tax Shield May