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

question 60

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 in Google pay a 15% tax rate on income from equity and a 35% tax rate on interest income.If Google were to issue sufficient debt to reduce its corporate taxes by $1 billion per year permanently,then the value that would be created is closest to:

• A)$6.1 billion.
• B)$10.2 billion.
• C)$12.2 billion.
• D)$14.3 billion.

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Definitions:

Environment

The surroundings or conditions in which a person, animal, or plant lives or operates.

Disposition

A person's inherent qualities of mind and character.

Stanford Prison Study

A psychological experiment conducted in 1971 that explored the effects of perceived power, focusing on the struggle between prisoners and prison officers.

Emotional Symptoms

Feelings or reactions that are a response to an event or condition, which can affect an individual's mental state and well-being.