1. Taxes affect financial decisions in several ways. From a tax perspective only - which of the following best defines a few of the important issues to keep in mind when making financial decisions for a corporation?
A. When financing, both debt and equity financing provide the same benefits and costs
B. When investing, the best alternative is to invest in equity
C. When financing, the best alternative is to issue equity financing, and when investing the best alternative is to invest in debt investments.
D. When financing, the best alternative is to issue equity
2. Ruby’s Mousers, Inc. currently has 500,000 shares of $1.00 par value common stock outstanding currently selling for $85 per share. The firm has current assets valued at $2,000,000, fixed assets of $30,000,000, and $7,000,000 of bonds outstanding. The firm’s total market capitalization is
A. $32,000,000
B. $37,000,000
C. None of the answers provided is true
D. $25,000,000