The tax benefit is attracted in case of which of the following elements of cost of capital ?
Cost of debt benefits from the interest tax shield: deductible interest reduces taxable profit. The corresponding after-tax cost is commonly expressed as the before-tax debt…
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The tax benefit is attracted in case of which of the following elements of cost of capital ?
Answer and explanation
Correct answer D
Cost of debt benefits from the interest tax shield: deductible interest reduces taxable profit. The corresponding after-tax cost is commonly expressed as the before-tax debt cost multiplied by one minus the tax rate.
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Maharashtra and Goa SET (MH SET)