Reduction in taxes reduces the cost of debt

Reference no: EM131947214

1. (TRUE or FALSE?) All suppliers of capital expect a rate of return much lower than the risk they take on.

2. (TRUE or FALSE?) Interest expense reduces a firm's tax liability and therefore this reduction in taxes reduces the cost of debt.

3. (TRUE or FALSE?) A firm’s capital is always supplied by the federal, state, and municipal governments.

4. (TRUE or FALSE?) The yield to maturity is the discount rate that makes the present value of coupon and principal payments equal to the price of the bond.

Reference no: EM131947214

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