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:

Rewarded

To be given something in recognition or exchange for one’s effort or achievement.

Punished

To subject someone to a penalty or consequence for a mistake or wrongdoing.

Consequences

Consequences refer to outcomes or effects that directly result from actions or conditions, often implying a reaction to what has been done or what has occurred.

Accomplish

To achieve or complete successfully a task, goal, or objective.