A large tax loss carry forward will tend to diminish the beneﬁt of the interest tax shield.

Name: A large tax loss carry forward will tend to diminish the beneﬁt of the interest tax shield.
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Question

Quizplus · Accepted Answer

A tax loss carry forward allows a company to offset future taxable income with prior years' losses, reducing its tax liability. However, this also means there may be less taxable income to shield with interest payments, thereby diminishing the benefit of the interest tax shield.

A Large Tax Loss Carry Forward Will Tend to Diminish