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

question 20

Multiple Choice

Use the following information to answer the question(s) below.
Google Corporation has no debt on its balance sheet in 2008,but paid $1.6 billion in taxes.Assume that Google's marginal tax rate is 35% and Google's borrowing cost is 7%.
-Assume that investors hold Google stock in retirement accounts that are free from personal taxes.If Google were to issue sufficient debt to reduce its taxes by $600 million per year permanently,then the amount that Google needs to borrow is closest to:

• A)$14.25 billion.
• B)$22.00 billion.
• C)$24.50 billion.
• D)$40.75 billion.

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Definitions:

Flexibility

The quality of being adaptable or variable, able to change or be changed according to circumstances.

Conservative Realism

An approach or mindset that emphasizes pragmatism and practicality, often prioritizing traditional methods and realism over radical changes or idealism.

Creative Idealism

The belief in pursuing innovative and idealistic solutions that go beyond conventional thinking, driven by creativity and optimism.

Traditional

Pertaining to long-established customs, beliefs, or methods that are passed down from generation to generation.