The impact of tax rate on cost of debt is: Option 1: A higher tax rate makes debt relatively cheaper Option 2: A higher tax rate makes debt relatively more costlier Option 3: A higher or lower tax rate doesn't have any impact on debt Option 4: A lower tax rate makes debt relatively cheaper

The answer is 'A higher tax rate makes debt relatively cheaper'. View full solution:

CUET Business Studies - The impact of tax rate on cost of debt is: | PYQs + Solutions

CUET Business Studies 2026 21st May Shift 2

Business Studies

Easy

A higher tax rate makes debt relatively cheaper

A higher tax rate makes debt relatively more costlier

A higher or lower tax rate doesn't have any impact on debt

A lower tax rate makes debt relatively cheaper

✅ Correct Option: 1