The tax deductibility of interest lowers the cost of debt financing.

Name: The tax deductibility of interest lowers the cost of debt financing.
Brand: Quizplus
Rating: 5.0 (45 reviews)

Question

Quizplus · Accepted Answer

When interest payments are tax deductible, it means that the amount of interest paid can be subtracted from the taxable income of the borrower, effectively lowering the amount of taxes owed. This in turn lowers the actual cost of debt financing, making it more attractive for borrowers.

The Tax Deductibility of Interest Lowers the Cost of Debt