The interest tax shield is equal to ______. a. $0 b. (EBIT - I ) *...
The interest tax shield is equal to ______.
a. $0
b. (EBIT - I ) * (1-the tax rate)
c. (equity + debt) * (1-the tax rate)
d. the tax rate multiplied by the amount of interest
Homework Answers
The interest tax shield is equal to ______.
Answer: Option [d]. the tax rate multiplied by the amount of interest.
Other options:
a. $0
Tax shield cannot be 0, unless interest is 0 or tax rate is 0.
b. (EBIT - I ) * (1-the tax rate)
This gives Net income
c. (equity + debt) * (1-the tax rate)
Is not valid as equity is not tax deductible.
Add Answer to:
The interest tax shield is equal to ______.
a. $0
b. (EBIT - I ) *...
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