Reena Industries Has $10,000 of Debt Outstanding That Is Selling

question 63

Multiple Choice

Reena Industries has $10,000 of debt outstanding that is selling at par and has a coupon rate of 7%. The tax rate is 34%. What is the present value of the tax shield?

• A) $2,800
• B) $3,000
• C) $3,400
• D) $3,800
• E) $7.000

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