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

question 2

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.
-Assume that five years have passed since Wyatt issued this debt.While tax rates have remained at 40%,interest rates have dropped so that Wyatt's current cost of debt capital is now only 4%.The present value of Wyatt's annual interest tax shield is now closest to:

• A)$2.8 million.
• B)$36.8 million.
• C)$60.0 million.
• D)$70.0 million.

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Definitions:

Membranous Structures

Structures composed of membrane, typically referring to parts of cells such as organelles enveloped by lipid bilayers.

Tympanic Membrane

A thin membrane that separates the outer ear from the middle ear, also known as the eardrum, vibrating in response to sound waves.

Ossicles

The small bones in the middle ear, named the malleus, incus, and stapes, transferring sound vibrations from the ear drum to the inner ear.

Light Intensity

A measure of the strength or brightness of light, often influencing photosynthesis in plants.