Question

by increasing its interest expense by $2,500 last year, bishara foods was able to reduce its taxes by $525. this $525 amount is called the: multiple choice interest tax shield. interest credit. homemade leverage shield. current tax yield. tax-loss interest.

Answer 1

The fact that the increase in interest expenses by Bishara Foods, led to taxes being reduced is called the interest tax shield.

What is the interest tax shield?

The concept known as the interest tax shield is used to refer to the fact that interest is a tax - deductible expense. This is because it is subtracted from income before the tax is calculated.

This means that the higher the interest expense a company has, the lower the tax they will incur. This is why an increase in interest expense for Bishara Food, led to a fall in taxes.

Find out more on interest tax shield at https://brainly.com/question/14190607

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