The June Bug Has a $270,000 Bond Issue Outstanding

question 95

Multiple Choice

The June Bug has a $270,000 bond issue outstanding.These bonds have a 7.5 percent coupon,pay interest semiannually,and have a current market price equal to 98.6 percent of face value.The tax rate is 39 percent.What is the amount of the annual interest tax shield?

• A)$3,948.75
• B)$4,112.60
• C)$5,311.22
• D)$7,897.50
• E)$8,225.20

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