--%>
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 : Insurance premium in Arrears What are

    What are the Insurance premium in Arrears?

    		•
  • Q : Management accounting as an information

    Explain Management accounting as an information system in brief?

    		•
  • Q : Reconstitution of Partnership Meaning

    Meaning of Reconstitution: Any alter in agreement of partnership is termed as reconstitution of partnership firm. In following circumstances a partnership firm might be reconstituted: A) Alter in Profit Sharing Rat

    		•
  • Q : Define Employee Stock Ownership

    Employee Stock Ownership: It is a qualified, defined contribution, employee benefit (that is, ERISA) plan designed to invest mainly in the stock of sponsoring employer. ESOPs are "qualified" in the logic that the ESOP's sponsoring company, the selling

    		•
  • Q : Benefit of economic in accounting

    Write down a short note on the benefit of economic in accounting management information?

    		•
  • Q : What is Cost Finding Cost Finding :

    Cost Finding: Cost finding methods generate cost data by analytical or sampling techniques. Cost finding methods are suitable for certain type of costs, like indirect costs, items with costs underneath set thresholds in the programs,

    		•
  • Q : Accrued liability Normal 0 false false

    Normal 0

  • Q : Accounting Information Systems &

    You must prove your calculations The following information pertains to Blue Company revenue cycle and was reported at December 31, 2011. Year 2011, additional information is as follows: 1.       100 units that was purchased fo

    		•
  • Q : Tax form a deadweight loss Why does a

    Why does a tax form a deadweight loss? A tax forms deadweight loss by artificially increasing price above the free market level, therefore reducing the equilibrium quantity. This reduction in demand decreases consumer as well as producer surplu

    		•
  • Q : Define Management Accounting Give a

    Give a brief introduction of the term ‘Management Accounting’. And also write down its objectives?

    		•