The fact that the interest paid on debt is a tax-deductible expense increases the cost of debt financing.

Name: The fact that the interest paid on debt is a tax-deductible expense increases the cost of debt financing.
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The fact that the interest paid on debt is tax-deductible actually decreases the effective cost of debt financing, because it reduces the company's taxable income, thereby lowering its tax liability.

The Fact That the Interest Paid on Debt Is a Tax-Deductible