How do tax considerations affect the cost of debt, Financial Management

Assignment Help:

How do tax considerations affect the cost of debt and the cost of equity?

For the reason that interest on debt is tax deductible to the issuing firm, the higher the tax rate the lower the following tax cost of debt financing. Tax considerations don't enter into the cost of equity computation since dividends paid to stockholders aren't tax deductible to the firm.

Related Discussions:- How do tax considerations affect the cost of debt

Calculate average annual return, Q. Calculate Average Annual Return? An...

Q. Calculate Average Annual Return? An investor buys a bond in 1978 maturity in 1980 at Rs.900. It has a maturity value of 10 years and par value of Rs. 1000. It fetches RS.90

Explain the term present value of the firm’s operations, Explain the term “...

Explain the term “present value of the firm’s operations” (also known as Enterprise Value). What does this number represent? The present value of the free cash flows of the comp

Define the wave of mergers in the banking industry, What is behind the wave...

What is behind the wave of mergers in the banking industry? A: Various economic factors have caused banking institutions to merge over the past various years. These factors inclu

Discuss the different forms of financing, Question 1 Explain the concept ...

Question 1 Explain the concept and phases of capital budgeting Question 2 Define and explain the methods of demand forecasting Question 3 Mention the elements o

Examine about the risk-based auditing, Examine about the Risk-based auditin...

Examine about the Risk-based auditing A risk based audit will be reviewing the risk management process and considering main risks of the organisation as a whole. Risk manage

Credit spreads and the valuation of non-treasury securities, It is not easy...

It is not easy to determine the theoretical value of non-treasury securities. However, we can use the treasury spot rate for the valuation of non-treasury security.

Factors affecting investment decisions, I have a question for my homework, ...

I have a question for my homework, which is: Explain, using relevant instances, how investment decisions are affected by different factors. Help please?

Certified public accountant, Certified Public Accountant (CPA) - ACCOUNTANT...

Certified Public Accountant (CPA) - ACCOUNTANT who has satisfied education, experience and examination requirements of her or his jurisdiction essential to be certified as a public

Illustrate about the financial management, Illustrate about the Financial M...

Illustrate about the Financial Management Individual businesses face problems dealing with acquisition of funds to carry on their activities and with determination ofoptimum

Internal rate of return, Internal Rate of Retur n The discount ...

Internal Rate of Retur n The discount rate at which the net current value (the value of all future cash flows, in excess of the real investment, expressed in today's d

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages