In Order to Calculate the Tax Shields Provided by Debt

question 41

Multiple Choice

In order to calculate the tax shields provided by debt, the tax rate used is the:

• A) average corporate tax rate
• B) marginal corporate tax rate
• C) average of shareholders' tax rates
• D) average of bondholders' tax rates

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Definitions:

Bank Service Charge

A bank service charge is a fee imposed by a bank on its customers for the provision of banking services such as account maintenance, transactions, and overdrafts.

Petty Cash Fund

A little sum of money reserved for immediate outlays on diverse small expenditures.

Journalize

To journalize is to record financial transactions in the chronological order in a company's accounting system.

Replenishment

Replenishment encompasses the process of stocking up or refilling inventory or supplies to ensure a continuous flow of goods or materials.