The tax deductibility of interest expense on bonds makes the effective cost of borrowing less than the amount of cash paid for interest.

Name: The tax deductibility of interest expense on bonds makes the effective cost of borrowing less than the amount of cash paid for interest.
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Because of the tax benefits of interest,the effective cost of borrowing is less than the cash paid for interest.This is a benefit of debt financing compared with equity financing.

The Tax Deductibility of Interest Expense on Bonds Makes the Effective