When corporate tax rates decline, the net cost of debt financing decreases.

Name: When corporate tax rates decline, the net cost of debt financing decreases.
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The net cost of debt financing is primarily affected by the interest rate on the debt and the tax deductibility of interest expenses. A decline in corporate tax rates reduces the tax shield benefit from deducting interest expenses, potentially increasing the net cost of debt financing.

When Corporate Tax Rates Decline, the Net Cost of Debt