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:

Petals

The colorful parts of a flower that surround the reproductive structures.

Corolla

Collectively, the petals of a flower.

Receptacle

In botany, the part of a flower stalk where the parts of the flower are attached.

Flower Parts

The structural components of a flower, including petals, stamens, carpels, and sepals, each performing specific functions in the reproductive process of plants.