The tax savings of the firm derived from the deductibility of interest expense is called the:
A) interest tax shield.
B) depreciable basis.
C) financing umbrella.
D) current yield.
E) tax-loss carry forward savings.

Question

Quizplus · Accepted Answer

The tax savings resulting from deducting interest expense from taxable income is called the interest tax shield. This is because it serves as a shield against taxation and can reduce the firm's overall tax liability.

The Tax Savings of the Firm Derived from the Deductibility