Tax consideration affect cost of debt and cost of equity, Financial Management

Assignment Help:

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

As interest on debt is tax deductible to the issuing firm, as much higher the tax rate the lower the after tax cost of debt financing.Tax considerations do not go through into the cost of equity calculation as dividends paid to stockholders are not tax deductible to the firm. 


Related Discussions:- Tax consideration affect cost of debt and cost of equity

Define the financial leverage effect, What is the financial leverage effect...

What is the financial leverage effect and what causes it?  What are the potential benefits and negative consequences of high financial leverage? Financial leverage is the extra

Approaches, Briefly discuss the three approaches to the short-term financin...

Briefly discuss the three approaches to the short-term financing problem and provide relevant examples of each?

A-b trust, It is a trust developed by a married couple with the purpose of ...

It is a trust developed by a married couple with the purpose of minimizing estate taxes. An A-B trust is a trust that splits into two on the death of the first spouse. It is produc

Describe the value maximisation criterion, Describe the value maximisation ...

Describe the value maximisation criterion In applying the value maximisation criterion, term value is used in terms of worth to the owners, which is, ordinary shareholders. Cap

Price of the share as per gordon''s model, Considering the following inform...

Considering the following information, what is the price of the share as per Gordon's Model?  Details of the Company

State the term - redemption, State the term - Redemption Redemption is ...

State the term - Redemption Redemption is repayment of debt security at or before maturity.  Redemption could at par or at a premium to face value. A debt security will be rede

Underwrite, Under write An arrangement under which the investment b...

Under write An arrangement under which the investment banks agree to purchase a certain amount of privacy of a new issue (typically an IPO) at a given date for a given pric

Treasury returns resulting from yield curve movements, Robert Litterman and...

Robert Litterman and Jose Scheinkman were the first to study how changes in the shapes of the yield curve affect the total return on the Treasury securities. The histor

What difference does it make ordinary annuities, If you are doing PVA and F...

If you are doing PVA and FVA problems, what difference does it make if the annuities are "ordinary annuities" or "annuities due"? In PVA or a FVA of annuity due trouble, annuit

What do you mean by misappropriation of fund, Q. What do you mean by Misapp...

Q. What do you mean by Misappropriation Of Fund? Misappropriation Of Funds allotted for specific works under capital or Revenue demand but the expenditure is incurred for anoth

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd