The Cost of Debt Is Equal to One Minus the Marginal

question 39

True/False

The cost of debt is equal to one minus the marginal tax rate multiplied by the average coupon rate on all outstanding debt.

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Definitions:

Single-Tax Movement

A political and economic movement that advocates for a single tax, often on land, to replace all other taxes, based on principles advocated by Henry George.

Allocative Efficiency

A state of resource allocation where it is impossible to make any one individual better off without making someone else worse off.

Private Ownership

The legal right held by individuals or corporations to have exclusive control over and use of property, assets, or commodities.

Opportunity Cost

Opportunity cost is the value of the next best alternative forgone as the result of making a decision.