The interest tax shield has no value for a firm when a firm elects 100% equity as its capital structure.

Name: The interest tax shield has no value for a firm when a firm elects 100% equity as its capital structure.
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Quizplus · Accepted Answer

The interest tax shield refers to the tax savings a company achieves due to the tax-deductibility of interest expenses. If a firm uses 100% equity financing, it has no debt and therefore no interest expenses to deduct, rendering the interest tax shield valueless.

The Interest Tax Shield Has No Value for a Firm