If a Firm Borrows $50 Million for One Year at an Interest

question 17

Multiple Choice

If a firm borrows $50 million for one year at an interest rate of 9%,what is the present value of the interest tax shield? Assume a 30% marginal corporate tax rate.

• A)$50.00 million
• B)$17.50 million
• C)$1.45 million
• D)$1.24 million

Understand the need for flexibility and adaptability in accounting information systems for effective decision making.

Comprehend the role and impact of technology on accounting information systems.

Acknowledge the importance of cost-benefit analysis in implementing and maintaining accounting information systems.

Recognize the essential need for professional judgment and basic knowledge of accounting systems by decision-makers.

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Definitions:

Ownership Stakes

The shares or interest that an individual or entity holds in a company, indicating the level of ownership.

Corporate Culture

Corporate culture refers to the beliefs, behaviors, and values that determine how a company's employees and management interact and handle outside business transactions, fundamentally affecting a company's internal environment and brand image.

Empowered Employees

Workers who are given the authority, capability, and encouragement to make decisions and contribute to the company's success.

Positive Publicity

Favorable exposure in the media or public domain that enhances the public image or reputation of an individual or organization.