lower the firm's tax rate, the lower will be its after-tax cost of debt and also its WACC, other things held constant.

Name: lower the firm's tax rate, the lower will be its after-tax cost of debt and also its WACC, other things held constant.
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Question

Quizplus · Accepted Answer

A lower tax rate increases the after-tax cost of debt because the tax shield from interest payments is reduced, potentially increasing the WACC if other factors remain constant.

Lower the Firm's Tax Rate, the Lower Will Be Its