Printing Plans to Issue a $1,000 Par Value, 20-Year Noncallable

question 44

Multiple Choice

Printing plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% annual coupon, paid semiannually.The company's marginal tax rate is 40.00%, but Congress is considering a change in the corporate tax rate to 30.00%.By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?

• A)0.57%
• B)0.63%
• C)0.70%
• D)0.77%
• E)0.85%

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Definitions:

Sales Messages

Promotional communications aimed at persuading or informing potential customers about a product or service.

Unethical Practices

Actions or behaviors that are considered wrong, immoral, or against professional standards of conduct.

External Proposal

A proposition or plan submitted by an outside party to an organization or individual for consideration or action.

Persuasive Language

Language used to convince or influence someone to believe or do something.