--%>
Assignment Help - homework help

How do tax influence the cost of debt and equity

How do tax considerations influence the cost of debt and equity?

Since interest on debt is tax deductible to the issuing firm, the higher the tax rate the lower the after tax cost of debt financing.  Considerations of tax do not enter in the cost of equity calculation as dividends paid to stockholders are not tax deductible to the firm. 

   Related Questions in Managerial Accounting

  • Q : Main working areas of the coach

    Write a short note on the main working areas of the coach maintenance department?

    		•
  • Q : Banker’s acceptance A security that

    A security that starts as an instrument similar to as check, in which a customer asks the bank to pay the designated amount to a payee in the future. The bank accepts the order, becoming responsible for payment, because the customer has the money to back the check, an

    		•
  • Q : Define Job Costing Job Costing : It is

    Job Costing: It is an order-specific costing method, utilized in situations where each job is distinct and is executed to the customer's specifications. Job costing includes keeping an account of direct and in-direct costs.

    Q : Explain Responsibility Segment

    Responsibility Segment: A noteworthy organizational, functional, operational, or process component that has the characteristics as: (i) Its manager reports to the entity's top management;

  • Q : Provision of management accounting

    What do you mean by the term provision of management accounting information?

    		•
  • Q : Explain Cash Management Cash Management

    Cash Management: Cash Management is the management of cash balances of a concern in such a way as to maximize the accessibility of cash not invested in inventories or fixed assets and to ignore the risk of insolvency. According to Keynes there are thr

    		•
  • Q : Define Cost Accounting Cost Accounting

    Cost Accounting: The Cost accounting is an approach to evaluate the overall costs which are related with conducting business. It is generally based on standard accounting practices, cost accounting is one of the tools which managers u

    		•
  • Q : Features of partnership Write some main

    Write some main features of partnership? Answer: Essential elements or major features of Partnership are as follows: A) Two or m

    		•
  • Q : Key elements of the Shell’s ethical code

    What are the key elements of the Shell’s ethical code? Describe in brief?

    		•
  • Q : Allocating resources in decision making

    Write down a short note on the Allocating resources in decision making process?

    		•