'Tax exhaustion':
A) refers to non-debt tax shields lowering a company's expected marginal tax rate only if they are large enough to reduce its taxable income to zero.
B) refers to non-debt tax shields lowering a company's actual marginal tax rate,thus reducing the expected tax savings on additional debt.
C) may indicate low tangible assets.
D) none of the given options.
Correct Answer:
Verified
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