For a firm paying 5% for new debt, the higher the firm's tax rate

Name: For a firm paying 5% for new debt, the higher the firm's tax rate
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Question

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The higher the firm's tax rate, the more the firm can deduct from its taxes, thus lowering the after-tax cost of debt. This is because interest payments on debt are tax-deductible, so a higher tax rate means a greater tax benefit from the interest expense deduction, resulting in a lower after-tax cost of debt.

For a Firm Paying 5% for New Debt, the Higher