If a Firm Permanently Borrows $100 Million at an Interest

question 19

Multiple Choice

If a firm permanently borrows $100 million at an interest rate of 8 percent, what is the present value of the interest tax shield? (Assume that the marginal corporate tax rate is 21 percent.)

• A)$8.00 million
• B)$5.60 million
• C)$21.00 million
• D)$26.67 million

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Definitions:

Deviant Behavior

Deviant behavior refers to actions that violate the norms or expectations of a society or group.

Psychotic

Pertaining to psychosis, a severe mental disorder characterized by a disconnection from reality, often involving hallucinations or delusions.

Neurotic

Pertaining to neurosis, a broad category of psychological disorders characterized by anxiety, depression, or other feelings of distress.

Personality Disorder

A type of mental disorder characterized by enduring maladaptive patterns of behavior, cognition, and inner experience.