Summary
The before- and after-tax cash-flow streams for an alternative can be significantly different and, because of that, the desirability of the alternative will be quite different in before- and after-tax terms. This chapter showed different ways that business decisions are influenced by income taxes. The chapter covered the following major points:
By allowing taxpayers to deduct interest expenses, the government is effectively reducing the interest rate. Borrowing money might not be quite as expensive as you thought it was.
Interest income is usually considered taxable income. One common exception is municipal bonds. The tax-free status of these bonds makes them more attractive than a taxable bond at the same interest rate.
Depreciation methods ...
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