Interest payments on debt are usually tax-deductible for the borrowing company.Group of answer choicesTrueFalse

This statement is True.

Interest payments on debt are generally tax-deductible, which provides a tax shield for companies that utilize debt financing. When a company takes on debt and pays interest on that debt, the interest expense can often be deducted from its taxable income. This is advantageous as it effectively lowers the company's overall tax burden.

The rationale behind this provision is to encourage business investments and expansion by minimizing the cost of borrowing. However, there are limits and regulations regarding how much interest can be deducted, particularly for highly leveraged companies or in certain jurisdictions. It's important for companies to understand the applicable tax laws in their region to maximize their tax efficiency while remaining compliant.

Thus, the correct answer to the statement is that it is indeed true that interest payments on debt are usually tax-deductible for the borrowing company.