The interest tax shield occurs because ________. a. Interest payments are a tax-deductible expense b. Interest payments
Question:
The interest tax shield occurs because ________.
a. Interest payments are a tax-deductible expense
b. Interest payments are made from after-tax income
c. Investors require a lower rate of return the higher the company’s tax rate
d. Investors require a lower rate of return the more debt the company incurs
Step by Step Answer:
a Interest payments are a taxdeductible expense The interest tax shi...View the full answer
Related Video
Interest, debt, finance, and capital markets are all important concepts in the world of economics and business. Interest is the cost of borrowing money, and it is typically expressed as a percentage of the amount borrowed. Debt is the money that is borrowed, and it has to be repaid with interest. Finance is the study of how individuals, companies, and organizations manage their money and investments. Capital markets are the places where companies and governments can raise money by selling stocks and bonds to investors. These markets play an important role in the overall economy by helping to fund investment and growth.
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