What Is the Annual Tax Shield to a Firm That

question 17

Multiple Choice

What is the annual tax shield to a firm that has a capital structure consisting of $100 million of debt and $180 million of equity, if the average interest rate on debt is 9%, the return on equity is 13%, and the marginal tax rate is 40%?

• A) $9.0 million
• B) $5.4 million
• C) $9.36 million
• D) $3.6 million

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Definitions:

Informed Consent

A process by which a person gives permission or agrees to undergo a specific medical treatment or participate in research after being informed about the risks, benefits, and alternatives.

Functionalism

Early perspective in psychology associated with William James, in which the focus of study is how the mind allows people to adapt, live, work, and play.

Psychiatric Social Worker

A social worker with some training in therapy methods who focuses on the environmental conditions that can have an impact on mental disorders, such as poverty, overcrowding, stress, and drug abuse.

Open Mind

The disposition to be receptive to different and new ideas or the opinions of others.