Effective January 1, 2018, U.S. corporate tax rates were reduced from a maximum of 35% to 21%.

What impact does this have on a company’s WACC?

Does it have a greater impact on companies that use a high level of debt than on companies that use a lower level of debt? Explain.

Is it likely to have an impact on a company’s capital structure, i.e., might a company change its weighting of debt vs equity?

Do you think it likely that the corporate tax rate will be increased this year?

If so, what impact might that have on companies?

Answer rating: 100% (QA)

Cuts in Corporate Tax Rate Taxes can have a noteworthy effect on a companys cost of capital Two years ago the Tax Cuts and Jobs Act reduced the corporate tax rate from 35 to 21 A reduction in the comp... View the full answer