The Interest Tax Shield Has No Value for a Firm

question 299

True/False

The interest tax shield has no value for a firm when the firm is unlevered.

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Definitions:

Linear Equations

Equations of the first degree, meaning they involve only linear terms and have graphs that are straight lines.

Consistent

In the context of systems of equations, it describes a system that has at least one solution.

Inconsistent

A term used to describe a system of equations that has no solution because the equations represent parallel lines.

Elimination

A method for solving a system of equations by adding or subtracting the equations in order to eliminate one of the variables.