A Local Firm Has Debt Worth $200,000,with a Yield of 9%,and

question 5

Multiple Choice

A local firm has debt worth $200,000,with a yield of 9%,and equity worth $300,000.It is growing at a 5% rate,and its tax rate is 40%.A similar firm with no debt has a cost of equity of 12%.Under the MM extension with growth,what is the value of your firm's tax shield,i.e.,how much value does the use of debt add?

• A) $92,571
• B) $102,857
• C) $113,143
• D) $124,457
• E) $136,903

---

Definitions:

Relatedness

The feeling or condition of being connected or related to others, frequently discussed in psychology in the context of social relationships and human motivation.

Basic Genome

The complete set of genetic information (DNA) in an organism or cell, providing the basic instructions for growth, development, and functioning.

Prader-Willi Syndrome

A genetic disorder characterized by a range of physical, mental, and behavioral problems including a constant sense of hunger, leading to obesity and type 2 diabetes.

Angelman Syndrome

A genetic disorder causing developmental delays, problems with motor coordination and balance, and a distinctive happy demeanor.