If a Firm Borrows $50 Million for One Year at an Interest

question 25

Multiple Choice

If a firm borrows $50 million for one year at an interest rate of 10%, what is the present value of the interest tax shield? Assume a 30% tax rate. (Approximately.)

• A) $1.364 million
• B) $1.5 million
• C) $1.0 million
• D) $4.545 million
• E) None of the above

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Definitions:

Move Object Button

A graphical user interface control designed to enable users to reposition an object within a document or application screen.

Drag

The action of clicking and holding on an object and moving it to a new location within a digital interface.

Resize Proportionally

An action to change the size of an image or an object while maintaining the aspect ratio to avoid distortion.

Resize Nonproportionally

Altering the size of an image or object without maintaining the original aspect ratio, which may distort the image.