What Are Interest Payments

question 59

Multiple Choice

What are interest payments?

• A) The difference between deposits and loans
• B) A percentage of the crops proportional to the loan each year
• C) A percentage of the loan each year after it has been cancelled
• D) A percentage of the outstanding loan each year
• E) Excessive usury

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Definitions:

Interest Tax Shield

The savings in income tax that a company achieves through deducting its interest expense from its taxable income.

WACC

Weighted Average Cost of Capital, a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Capital Structure

The particular combination of debt and equity that a company uses to finance its overall operations and growth.