How Much Debt Is Outstanding If the Present Value of a Perpetual

question 19

Multiple Choice

How much debt is outstanding if the present value of a perpetual tax shield is $300,000,the tax rate is 35% and the interest rate on the debt is 10%?

• A) $300,000
• B) $857,143
• C) $3,000,000
• D) $3,750,000

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Definitions:

Material Facts

Important information that could influence a decision-making process, particularly in legal and financial contexts.

Justifiably Relied

A legal principle where a party has a right to depend on the information or commitment of another, expecting it to be true or honored.

Fraudulent Misrepresentation

A false statement intentionally made to deceive, causing the victim to rely upon it to their detriment.

Suspension

The temporary cessation or pause of an activity, status, or function, often as a disciplinary measure or pending an investigation.