|
|
Interest tax shield |
|
|
|
 Home Site Map Add Term Search About Us Contributors |
Interest tax shieldThe reduction in income taxes that results from the tax-deductibility of interest payments.Interest tax shield Similar MatchesSimple interestSimple interestInterest, normally paid annually, which is earned on deposited capital only. Unlike compound interest, the annual interest is not added to the capital. For example, if the capital deposited is £1,000 and the interest rate is £80, you would receive £80 at the end of the first year and at the end of the second year. This contrasts with compound interest, where the £80 interest earned on the first year would be added to the original capital, and the amount of money earning interest in the second year would be £1,080.00. Earnings before interest and, taxes (EBIT)Earnings before interest and, taxes (EBIT)A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. In other words, operating and nonoperating profit before the deduction of interest and income taxes. Spot interest rateSpot interest rateInterest rate fixed today on a loan that is made today. Related: Forward interest rates. Interest receivableInterest receivableAn accounting term which refers to the amount of income a company receives in the form of interest payments on its cash. The figure for interest receivable can be found in the balance sheet. Its flip side is 'interest payable' - the amount a company pays on its borrowings. Interest only mortgagesInterest only mortgagesWith an interest-only mortgage, your monthly repayments to the lender consist only of interest on the total loan amount. The interest payments will vary depending on the interest rate being charged by the lender at the time. This type of mortgage involves paying the lowest possible monthly outlay to the lender, as no capital is included in the repayment. Instead of repaying the capital, regular payments are put aside in a suitable investment or savings plan. This grows cumulatively and assumptions are made regarding its growth in order to calculate a monthly repayment figure. If you are fortunate, the investment will accumulate at a higher rate than is required to pay back your loan on time, resulting in a cash surplus at the end of the term. This is not always the case however, and sometimes there can be a cash deficit at the end of the term. Further SuggestionsInterest only loanInterest accrual rate Open interest Short interest Interim interest Interest rate ceiling Covered Interest Rate Parity Market interest rate Interest equalization tax Mortgage interest deduction Net interest cost (NIC) Interest equalization tax Interest rate bond interest yield stepped interest debenture stocks Interest only strip (IO) Applied or nominal interest rate Variable interest rate Daily interest Simple interest Effective annual interest rate Covered interest rate Interest expense Covered interest parity interest cover |
|
|
|