The Tax Shield on Interest Is Calculated by Multiplying the Interest

question 33

True/False

The tax shield on interest is calculated by multiplying the interest rate paid on debt by the principal amount of the debt and the firm's marginal tax rate.

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Definitions:

Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job, role, or subject, or to make an effort to attain a goal.

Intrinsic Motivation

The drive to engage in an activity for its own sake, due to the inherent pleasure and satisfaction derived from the activity itself.

Primary Drives

Basic internal motivating forces in psychology, such as hunger and thirst, which drive behavior for survival.

Drive-Reduction Principle

A theory in psychology that posits motivation arises from biological needs that drive an individual to act in ways that reduce the drive and bring about a steady state.