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When a Company Receives an Interest-Bearing Note Receivable, It Will

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When a company receives an interest-bearing note receivable, it will


Definitions:

Taxable Income

The portion of an individual's or company's income used to determine how much tax will be owed to the government.

Interest Tax Shield

The reduction in income taxes that results from taking an allowable deduction for interest expenses.

Interest Tax Shield

The decrease in income taxes that occurs by subtracting a permitted deduction, like debt interest, from taxable income.

Levered Firms

Companies that employ debt (loans or bonds) in their capital structure alongside equity (stocks).

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