Suppose a Project Financed Via an Issue of Debt Requires

question 93

Multiple Choice

Suppose a project financed via an issue of debt requires six annual interest payments of $20 million each year. If the tax rate is 30% and the cost of debt is 8%, what is the value of the interest rate tax shield?

• A) $32.64 million
• B) $23.20 million
• C) $31.35 million
• D) $27.74 million

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Definitions:

Dermatome

An area of skin that is mainly supplied by a single spinal nerve.

Spinal Cord

The long, thin, tubular structure made up of nervous tissue, which extends from the medulla oblongata in the brainstem down the vertebral canal to the lower back, facilitating nerve impulses between the brain and the rest of the body.

Basal Ganglia

A group of structures linked to the thalamus in the base of the brain and involved in coordination of movement.

Forebrain

The anterior part of the brain, including the cerebral hemispheres, thalamus, and hypothalamus, involved in complex functions.