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

question 34

Multiple Choice

Keys 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:

Defensive Design

The planning and construction of buildings, urban spaces, and products to minimize vulnerability to threats such as crime and terrorism.

Matrilineal

A system of lineage or kinship in which familial descent and inheritance rights are traced through the mother's line.

Patrilineal

A system of lineage or descent traced through the male line, where inheritance and familial ties are determined by the father's lineage.

Agricultural Societies

Communities or societies that rely on agriculture as the main means of subsistence, with a significant portion of the population engaged in farming, livestock rearing, or other agricultural activities.