prudencerufus
14.12.2019 •
Business
1. the interest tax shield (tax deductibility of interest) is a key reason why: the required rate of return on assets rises when debt is added to the capital structure. the value of an unlevered firm is equal to the value of a levered the net cost of debt to a firm is generally less than the cost of equity. the cost of debt is equal to the cost of equity for a levered firm.
Solved
Show answers
More tips
- S Style and Beauty How to Properly Apply Eye Makeup: Tips from a Professional Makeup Artist...
- A Animals and plants How ants survive winter: exploring the secrets of their winter life...
- F Food and Cooking Discover How to Properly Prepare Dough for Rasstegai...
- P Philosophy Unidentified Flying Object - What is the Nature of this Phenomenon?...
- F Family and Home Protect Your Home or Apartment from Pesky Ants...
- O Other What is a Disk Emulsifier and How Does it Work?...
- F Family and Home What does a newborn need?...
- F Family and Home Choosing the Right Car Seat for Your Child: Tips and Recommendations...
- F Food and Cooking How to Get Reconfirmation of Registration?...
- C Computers and Internet How to Get Rid of Spam in ICQ?...
Answers on questions: Business
- B Business Accounts receivable, equipment, the building itself, and the land on which the building stands are examples of:...
- E English This is a crossword puzzle and i cant figure it out without a word bank across 1) a _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ summary is a synopsis of the events, characters,...
- M Mathematics I am terrible at math, so i might need some help with this...
- M Mathematics Un atleta recorre un camino de 6 kilómetros en un tiempo de 16 minutos (0.267h). Determina la magnitud de su velocidad en Km/h....
- B Biology Which is true regarding all x-linked disorders? a. they are linked to an unknown chromosome b. they result in a longer lifespan c. they are disorders that affect...
- E English Choose the correct citation for a magazine article. a. mcgovern, joe: our lady of chaos. entertainment weekly. 13 may 2016: 32-33. print. b. mcgovern, joe. our lady...
Ответ:
the net cost of debt to a firm is generally less than the cost of equity.
Explanation:
If we assume both, investor in firms and lender to firms want's a certain return x
because the lender return (the interest) are tax deductible the net cost of debt will be: x ( 1 - t)
where t is the tax rate being rate beteen 0 and 1
as 1 less a fraction will be less than 1 we can stablish that:
x > x(1 - t)
x is the cost of equity
while x(1-t) is the net cost of debt
therefore, the cost of debt is lower than cost of equity.
Ответ:
fds
Explanation: