In a world with both financial distress and tax, which of the following is FALSE...
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Finance
In a world with both financial distress and tax, which of the following is FALSE for a firm which has a capital structure made up of only common equity and straight debt.
a. Bankruptcy costs are paid before debt
b. Equity has a residual claim on the firms earnings
c. Debt is a fixed cost burden
d. Equity has a senior claim on a firms earnings
e. None of the above
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