According to the signaling theory, when should a firm use debt to finance beyond the normal target capital structure?
A. When the debt/assets ratio is greater than one
B. When marginal tax shelter benefits are equal to marginal bankruptcy-related costs
C. When investors and managers have identical information about the firm's prospects
D. When the firm has favorable prospects
E. When the firm is entirely equity financed
Answer: D
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The party that agrees to repay is the ____________________ of the note
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Stephen Company uses the FIFO method in its process costing system. Beginning inventory in the mixing department consisted of 5,000 units that were 65 percent complete with respect to conversion costs. Ending work in process inventory consisted of 5,000 units that were 70 percent complete with respect to conversion costs. If 12,000 units were transferred to the next processing department during
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