A Firm Has $60,000 of Debt Outstanding That Is Selling

question 77

Multiple Choice

A firm has $60,000 of debt outstanding that is selling at par and has a coupon rate of 8%.The tax rate is 40%.What is the present value of the tax shield?

• A)$1,760
• B)$4,400
• C)$24,000
• D)$33,000
• E)$60,000

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Definitions:

Efficient Utilization

the process of using resources, such as time, money, or materials, in a way that maximizes productivity and minimizes waste or inefficiency.

Skill Coordination

The process of effectively synchronizing and integrating various skills to perform a task.

Functional Design

An approach to designing products, systems, or processes that emphasizes practicality and efficiency, focusing on the functionality rather than the form.

Control and Coordination

The processes and mechanisms by which an organization or system regulates functions and actions to achieve desired outcomes.