How Much Debt Is Outstanding in a Firm That Has

question 84

Multiple Choice

How much debt is outstanding in a firm that has calculated the present value of a perpetual tax shield to be $300,000 if the tax rate is 35% and the debt carries a 10% rate of return?

• A) $300,000
• B) $857,143
• C) $3,000,000
• D)$3,750,000

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Definitions:

Transcription

The method through which the data encoded in a DNA strand is replicated into a new messenger RNA (mRNA) molecule.

RNA Polymerase

Enzyme that carries out transcription.

Promoter Site

A region of DNA that initiates transcription of a particular gene.

Messenger RNA

A type of RNA molecule that carries genetic information from DNA to the ribosome, where it directs protein synthesis.