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Why do the companies in high tax brackets incur lower after-tax interest costs by financing through debt?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable

Section: Chapter Questions

Problem 2GI: Why does issuing debt result in an income tax advantage when compared to issuing equity?

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