Tax Shield on Debt

AFM Capital Structure and Cost of Capital Free JAIIB Capsule 27 views Updated 19 Sep 2026

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AFM · Capital Structure and Cost of Capital

When deciding between issuing equity or taking a bank loan, finance managers look at tax implications. Why is the 'Cost of Debt' effectively lower than the interest rate paid?

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When deciding between issuing equity or taking a bank loan, finance managers look at tax implications. Why is the 'Cost of Debt' effectively lower than the interest rate paid?

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This capsule covers Accounting & Financial Management for Bankers, Capital Structure and Cost of Capital. Members get the complete explanation plus every other premium capsule, mock test and PDF.

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