Use the Following Information to Answer the Question(s)below

question 56

Multiple Choice

Use the following information to answer the question(s) below.
Wyatt Oil issued $100 million in perpetual debt (at par) with an annual coupon of 7%.Wyatt will pay interest only on this debt.Wyatt's corporate tax rate is expected to be 21% for the foreseeable future.
-The present value of Wyatt's annual interest tax shield is closest to:

• A)$4.2 million.
• B)$7.0 million.
• C)$21 million.
• D)$60 million.

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Definitions:

Aggregate Plan

An aggregate plan is a strategy for meeting forecasted demand by adjusting production rates, workforce levels, inventory levels, and other operational variables in the short to medium term.

Level Scheduling

A production planning method aimed at producing goods at a consistent rate, minimizing fluctuations in production levels and inventory.

Counterseasonal Demand

Demand for products or services that occurs during opposite or different seasons than the peak season.

Manipulation

The act of handling, controlling, or using something in a skillful manner, often with a negative connotation of unfair or deceitful control.