In Order to Calculate the Tax Shields Provided by Debt

question 43

Multiple Choice

In order to calculate the tax shields provided by debt, the tax rate used is the

• A)average corporate tax rate.
• B)marginal corporate tax rate.
• C)average of shareholders' equity tax rates.
• D)average of bondholders' personal tax rates.

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Definitions:

Energetic Material

Substances that release energy rapidly when triggered, used in explosives, propellants, and pyrotechnics.

Nitroglycerin

A volatile compound used as an explosive and in medicine as a vasodilator to treat heart conditions.

Major Organic Product

The primary outcome or the most abundantly produced compound in an organic reaction, as opposed to minor products.

Reaction

A procedure that results in changing one group of chemical compounds into different ones.