Question

For which sources of capital do we need to consider tax implications? A. Common equity B....

For which sources of capital do we need to consider tax implications?

A.

Common equity
B.

Preferred stock
C.

Debt
D.

all of the above
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Homework Answers

Answer #1

Option C is correct. Debt

Debt is the Source of Capital which can make a lot of impact on the taxable income. Debt Capital is also known as Tax shieldng Capital because interest payable on Debt is a tax deducatible source of Capital while Dividend paid on Common Equity and Preferred Equity are not tax deductible.

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