For each statement below state whether it is TRUE or FALSE and correct the FALSE ones:

a. A biotech firm might be developing drugs with tremendous potential, but it has yet to rec no eive any revenue from these drugs. Such a firm will not have taxable earnings. In that case, a tax-optimal capital structure does not include equity.

b.No corporate tax benefit arises from incurring interest payments in excess of EBIT.

c.The optimal level of leverage from a tax saving perspective is the level such that interest equals FCF.

d.In general, as a firm's interest expense approaches its expected taxable earnings, the marginal tax advantage of debt increases, limiting the amount of equity the firm should use.