Question

In the list below, one statement is true and three are false.

When the firm is in financial distress, stockholders have an incentive to take risks. That's because riskier projects have higher NPV than the safer projects.
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The signaling theory says that it would be profit-maximizing for the firms to increase their amount of debt, as long as the tax savings from increasing debt are higher than the potential financial distress costs.
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Under both the pecking order theory and the signaling theory, firms that increase their debt amounts want to send a certain signal to the investors.
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Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 40% corporate income tax rate, its stockholders face a 25% income tax rate, and its creditors face a 32% income tax rate, then such firm may choose to have more debt (is the underlined part true or false?).
[ Select ]

Answer 1

I think this is true and other are false. well just my guess

Step-by-step explanation:

Studies have shown that some firms choose their capital structure in such a way that it brings the most after-tax cash to its investors. For example, if a firm faces a 40% corporate income tax rate, its stockholders face a 25% income tax rate, and its creditors face a 32% income tax rat