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:

Partial Reinforcement

A conditioning method where a reward is not administered every time the desired behavior is performed, making the response more resistant to extinction.

Continuous Reinforcement

A method of learning in which every correct response is followed by a reward, facilitating the acquisition of a desired behavior.

Stimulus Control

Stimulus control refers to the modification of behavior through the manipulation of environmental factors that trigger specific responses.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, through which an association is made between a behavior and a consequence for that behavior.