If a Firm Permanently Borrows $50 Million at an Interest

question 68

Multiple Choice

If a firm permanently borrows $50 million at an interest rate of 10%, what is the present value of the interest tax shield? Assume a 30% tax rate.

• A) $50.0 million
• B) $25.0 million
• C) $15.0 million
• D) $1.5 million

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Definitions:

Tangible Details

Specific, concrete elements or facts that can be observed and measured, often enhancing the realism or credibility of a description or story.

Authoritative Parents

Parents who are firm, setting clear and consistent limits, but who try to reason with their children, giving explanations for why they should behave in a particular way.

Clear Limits

Well-defined boundaries that establish the expectations and rules guiding individuals' behaviors within a certain context.

Reason

The mental capacity to logically think, infer, and make conclusions based on evidence and rational thought.