Question

g Studies have found that firms with large investments in tangible assets tend to have: Group of answer choices the highest financial distress costs of any firm per dollar of debt. higher target debt-equity ratios than firms that primarily invest in intangible assets. the same capital structure as firms that specialize in intangible asset investments.

Answer 1

Answer: Higher target debt-equity ratios than firms that primarily invest in intangible assets.

Explanation:

Tangible assets can be expensive and when a company has large investments in them that usually means that they spent a considerable amount to acquire them. This is why they turn to debt because it will allow them to afford these tangible assets.

This is why companies in the airplane and electricity distributing companies have a lot of debt, they had to invest in the large amount of tangible assets needed to make planes or distribute electricity.