Financing an investment with debt _______the net present value of the investment because interest payments_______ tax deductible and the full amount of the principal is due in .
A)increases; are; present time
B)increases; are; the future
C)decreases; are; the present time
D)increases; are not; the future

Question

Quizplus · Accepted Answer

Financing an investment with debt increases the net present value because interest payments are tax deductible, which reduces the taxable income and thus taxes paid, and the full amount of the principal is typically due in the future, allowing the use of funds at a lower cost in the present.

Financing an Investment with Debt _______The Net Present Value of the Investment