What Is the Amount of the Annual Interest Tax Shield

question 66

Multiple Choice

What is the amount of the annual interest tax shield for a firm with $3 million in debt that pays 12% interest if the firm is in the 35% tax bracket?

• A) $126,000
• B) $234,000
• C) $360,000
• D) $1,050,000

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Definitions:

Flexibility

The quality of being able to change or be changed easily according to the situation, often in response to different problems or conditions.

Adaptability

The quality of being able to adjust to new conditions or environments, and the capacity to deal with various changes.

Added Value Negotiating (AVN)

A negotiation strategy that focuses on increasing the overall value of the deal for all parties involved, instead of merely haggling over existing value or resources.

Nadler-Tushman Model

An organizational diagnosis model that focuses on understanding how changes in one part of the organization affect other parts, featuring input, process, and output components.