The appropriate discount rate for tax shields when the debt schedule is fixed in advance. Introduction: An interest tax shield is a deduction in taxable income for a corporation or individual achieved through claiming deduction like depreciation , charitable donations, and mortgage interest. Tax shield lowers the overall cost of taxes owned by the individual taxpayer.

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Chapter 18.6, Problem 2CC

Summary Introduction

To discuss: The appropriate discount rate for tax shields when the debt schedule is fixed in advance.

Introduction:

An interest tax shield is a deduction in taxable income for a corporation or individual achieved through claiming deduction like depreciation, charitable donations, and mortgage interest. Tax shield lowers the overall cost of taxes owned by the individual taxpayer.

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