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Yes, in most cases.
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∙ 15y ago
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Is Interest paid to debt collectors tax deductible?
no
What are the effects of a corporate tax on the Weighted Average Cost of Capital of a business?
Only when interest paid on debt is allowed to be tax deductible that a corporate tax will help pull the WACC down. This is because we used an after-tax rate for cost of debt in calculating WACC. And by using the after-tax rate we are assumming that the government allows companies to use interest paid on debt reduce their income tax obligations, hence creating a tax-shield benefit for adding debt. From Peerawich
Why is the after-tax cost of debt rather than the before-tax cost used to calculate the weighted average cost of capital?
Because interest expense is deductible. Because interest expense is deductible.
Why do you use an after tax figure for cost of debt but not for cost of equity?
Because interest is a tax-deductible expense for the firm, but dividends paid to shareholders are not.
You have a credit line and you are told that if you pay off the line over years it is not deductible If you pay it off in the year you use it it is deductible Is this right?
You cannot take any credit card debt or interest as a deductible on your taxes. Credit card debt is considered personal debt and does not qualify for tax breaks.
Is credit card interest payments tax deductible?
NO The personal interest is never deductible on your 1040 federal income tax return
Is cost of equity capital less than cost of debt capital?
Cost of equity > Cost of debt Reason: When u issue debt, for example in the form of bonds, u have to pay bondholders interest. This interest is tax deductible. On the other hand, when u issue equity, i.e. stocks, u pay dividends. This dividend is taxed as corporate income. Because of the ability of debt to escape taxation vis-a-vis equity, cost of debt is lower than cost of equity. In fact, this is called a debt tax shield.
Is the interested paid on a back spousal support payment tax deductible?
Personal interest is not tax deductible
Is interest from a personal loan tax deductible?
Not in Canada.
Is mortgage interest deductible on your taxes?
yes on your income tax
Which of the following are income tax deductible items to a corporation Common stock dividends preffered stock dvidends retained earnings or Bond interest expenses?
Interest expenses are tax deductible.
Are state income tax payments deductible on a corporate tax return?
Yes. State income (and net worth based) taxes are deductible from taxable income for Federal income tax purposes.
