What is an interest tax shield? What does it mean to the financial success of a firm?
An interest tax shield is essentially a way to avoid paying taxes on the interest earned on an investment via financing arrangement - typically overseas, but potentially within municipalities (Business Dictionary, 2014). For companies, an investment may be in other company stock, bonds, or simply interest earned from a banking account. These earnings are typically taxable, unless they are a non-taxable municipal bond that the company owns ...
246 words with reference explain the concept of an interest tax shield and how that can contribute to success.