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
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