The Interest Tax Shield Has No Value for a fiRm

question 344

True/False

The interest tax shield has no value for a firm when the tax rate is equal to zero.

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Definitions:

CIFP Course Materials

Comprehensive learning materials provided for the Certified Financial Planner (CIFP) program covering financial planning, investment strategies, and ethical practices.

Ordinary Annuity

A financial product where payments are made at the end of each period for a fixed amount of time.

Present Value

The current value of a future sum of money or stream of cash flows given a specified rate of return, often used in the discounting of future income streams or liabilities.

Compounded Annually

Interest that is calculated once a year and added to the principal, meaning each year's interest earns interest in subsequent years.