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Which of the following is able to explain why debt financing includes a tax shield? Taxes are reduced by the amount of the interest. Taxable

Which of the following is able to explain why debt financing includes a tax shield?

Taxes are reduced by the amount of the interest.

Taxable income is reduced by the amount of the debt.

Taxable income is reduced by the amount of the interest.

Taxes are reduced by the amount of the debt.

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