The Present Value of the Interest Tax Shield Is Expressed

question 19

Multiple Choice

The present value of the interest tax shield is expressed as:

• A)(T_C × D)/R_A.
• B)V_U + (T_C × D).
• C)[EBIT × (T_C × D)]/R_U.
• D)[EBIT × (T_C × D)]/R_A.
• E) T_C × D.

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Definitions:

Real Authority

The actual power given to an agent or representative to act on behalf of another person or entity in legal or business matters.

Apparent Authority

The appearance or assumption of authority based on the actions or statements of the principle, leading a third party to believe that an agent has the authority to act.

Sole Proprietorship

A Sole Proprietorship is a type of business entity that is owned and run by one individual, with no distinction between the business and the owner, making the owner personally liable for the debts of the business.

Legal Person

An individual or organization capable of bearing legal rights and obligations, including the ability to enter into contracts and sue or be sued.