Newborn Nursery Has 8,000 Bonds Outstanding with a Face Value

question 42

Multiple Choice

Newborn Nursery has 8,000 bonds outstanding with a face value of $1,000 each.The coupon rate is 6.5 percent and the tax rate is 40 percent.What is the present value of the interest tax shield?

• A)$2.82 million
• B)$2.83 million
• C)$3.09 million
• D)$3.13 million
• E)$3.20 million

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