The Interest Tax Shield

question 28

Multiple Choice

The interest tax shield

• A) does not affect the WACC.
• B) makes it less costly to distribute cash to the investors through interest payments than through dividends.
• C) is given as: D × (1 − t).
• D) Both B and C

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Definitions:

U-bolts

Curved bolts shaped like the letter "U" with threaded ends, used to clamp components together, often in automotive or structural applications.

Centerbolt

A central bolt typically used in securing a component or assembly in place, often seen in applications like vehicle suspension systems.

Multi-leaf Spring

A type of suspension spring consisting of several layers of metal leaves stacked together to provide support and absorb shocks.

Equalizing-beam Suspension

A type of vehicle suspension system that uses a central beam to distribute weight and balance between axles.