27. Why is a firm's after-tax cost of debt lower than its before-tax cost of debt?

27.

Why is a firm's after-tax cost of debt lower than its before-tax cost of debt?

Select one:

a. Investors who purchase the bonds must pay tax on the interest payments they receive

b. The firm must pay tax on the interest payments they make to the bondholders

c. The interest paid to the bondholders is a tax-deductible expense for the firm

d. The firm that issues the bond must pay flotation costs