Calculate the after-tax cost of financing with debt and explain financial leverage. - Since interest expense is
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Calculate the after-tax cost of financing with debt and explain financial leverage.
- Since interest expense is deductible for tax purposes, the presence of interest expense lowers the taxes owed.
- The formula for the after-tax effect of interest expense is \((1-\) tax rate \() \times\) interest expense.
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Related Book For 
Cornerstones Of Financial Accounting
ISBN: 9780176707125
2nd Canadian Edition
Authors: Jay Rich, Jefferson Jones, Maryanne Mowen, Don Hansen, Donald Jones, Ralph Tassone
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