If a Corporation Has an Average Tax Rate of 40

question 129

Multiple Choice

If a corporation has an average tax rate of 40 percent, the approximate annual, aftertax cost of debtfor a 10-year, 8 percent, $1,000 par value bond selling at $1,150 is

• A) 6 percent.
• B) 8 percent.
• C) 4.2 percent.
• D) 4.8 percent.

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Definitions:

Unequally Shared

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