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:

Trust Between

The level of confidence, reliability, and understanding existing among individuals, organizations, or systems, enabling a cooperative or interdependent relationship.

On-the-Job Training

Training provided to employees at their place of work, focusing on the practical application of skills necessary for their role.

Small and Medium

Generally refers to small and medium-sized businesses or enterprises characterized by their size, which falls below certain limits in terms of employees or revenue.

Low Costs

Refers to minimal financial expenditure or the aim to reduce expenses in business operations or activities.