Paying Off Loans Is Advisable When the After-Tax Return on Investments

question 99

True/False

Paying off loans is advisable when the after-tax return on investments is more than the interest rate on the loan.

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Definitions:

Interest Revenue

Income earned from lending money or from investments in interest-bearing accounts or securities.

Matching Revenue

The accounting principle of recognizing revenue and the related expenses in the same accounting period to accurately report profit.

Incurred Expenses

Costs that have been realized or consumed, typically through the operation of a business.

Net Income

The total earnings of a company after deducting all expenses, including taxes and costs, from its total revenues, indicating its profitability.