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Author Question: Since the issuer of zero (or low) coupon bonds can annually deduct the current year's interest ... (Read 37 times)

Alygatorr01285

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on: Jul 11, 2018
Since the issuer of zero (or low) coupon bonds can annually deduct the current year's interest accrual without having to actually pay the interest until the bond matures (or is called), its cash flow each year is increased by the amount of the tax
 
  shield provided by the interest deduction.
  Indicate whether the statement is true or false

Question 2

Cash outlays that had been previously made and have no effect on the cash flows relevant to a current decision are called ________.
 
  A) incremental historical costs
  B) incremental past expenses
  C) opportunity costs foregone
  D) sunk costs


scottmt

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Reply #1 on: Jul 11, 2018
Answer to Question 1

TRUE

Answer to Question 2

D


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