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ACC501 Business Finance , GDB # 1 , Opening date November 18, 2014 , Closing date November 25, 2014 (marks 5)

Important announcement

Graded Discussion Board

Business Finance (ACC501)

 

Dear Students!

This is to inform that Graded Discussion Board (GDB) No. 01 will be opened on November 18, 2014 for discussion and last date for posting your discussion will be November 21, 2014.

 

Topic/Area for Discussion

 “Tax Shield”

 

This Graded Discussion Board will cover first 06 lessons.

 

Discussion Question:

If a company induces debt in its capital structure, it gets tax advantage i.e. its tax liability is reduced. This particular tax advantage is known as tax shield. Theoretically, it can be said in this case that the overall capital of a company should be financed through debt in order to avail maximum advantage. Is it practically possible and feasible? Discuss its impact on business entity.

Important Instructions:

  1. Your discussion must be based on logical facts.
  2. Do not copy or exchange your answer with other students. Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
  3. Obnoxious or ignoble answer should be strictly avoided.
  4. Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB is over.

Views: 4050

Replies to This Discussion

you guys able to open VULMS???

I want to submit GDB#1 only 2 hours remaining but website is not opening

LMS is not working ...

@Kiran, You submitted GDB??

Any one knows the VU ID of this Subject teacher ??

You can send to acc501@vu.edu.pk

Guys,

Date for GDB is extended till 25th November

Have more time to Discuss, Please share your thought also

Yes, it is practically possible that debt can be worked as a tax shield. Simply a person or a bank gives loan or finance unless they got security of products, land and machinery. When a person using loan from a bank, it reduces the tax for the owner of the industry. This is a simple theory, at the end of working year FBR visits and demands for the bills of electricity and markup of a year, which will be deducted from the total amount of tax. If a person was unable to pay the markup or loan then the bank will cease his property and everything till their amount recovers.

Guyz this is an idea that I shared... I hope it will help us

Debt is always not feasible for capital structure if all the capital we financed with debt we would get the benefits of Tax shield but in other way we have risk for return back the debt amount, If our business shutdown and we will be unable to pay the debt we have to pay from our personal property.

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