Always use the average corporate tax rate to calculate the interest tax shields for firms.

Name: Always use the average corporate tax rate to calculate the interest tax shields for firms.
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Question

Quizplus · Accepted Answer

The average corporate tax rate may not accurately reflect the actual tax rate a firm pays due to tax deductions, credits, and other tax-planning strategies. It is more accurate to use the firm's marginal tax rate, which is the tax rate on the next dollar of taxable income.

Always Use the Average Corporate Tax Rate to Calculate the Interest