In the United States and many other tax jurisdictions, the interest on debt financing is a deduction to arrive at taxable income.
If you want to change selection, open document below and click on "Move attachment"
2.1. Taxes and the Cost of Capital
Notice that in Equation 1 we adjust the expected before-tax cost on new debt financing, r d , by a factor of (1 − t). In the United States and many other tax jurisdictions, the interest on debt financing is a deduction to arrive at taxable income. Taking the tax-deductibility of interest as the base case, we adjust the pre-tax cost of debt for this tax shield. Multiplying r d by (1 − t) results in an estimate of the after-tax co
Summary
status
not read
reprioritisations
last reprioritisation on
suggested re-reading day
started reading on
finished reading on
Details
Discussion
Do you want to join discussion? Click here to log in or create user.