Kelner's Nursery Has 8,000 Bonds Outstanding with a Face Value

question 94

Multiple Choice

Kelner's 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 34 percent. What is the present value of the interest tax shield?

• A) $2.72 million
• B) $2.83 million
• C) $3.09 million
• D) $3.13 million
• E) $3.26 million

---

Definitions:

Inspection Time

The time allocated for examining and checking goods or services to ensure they meet quality standards.

Value-Added Time

The portion of production time that adds value to the product, as opposed to time spent on non-value-adding activities.

Quality Cost Reports

Documents that outline the costs associated with ensuring products meet quality standards, including prevention, appraisal, and failure costs.

Lost Sales

Revenue opportunities foregone due to stockouts, production constraints, or market limitations.