Use the Following Information to Answer the Question(s)below

question 42

Multiple Choice

Use the following information to answer the question(s) below.
d'Anconia Copper has $200 million in cash that it can use for a share repurchase.Suppose instead that d'Anconia Copper invests the funds in an account paying 5% interest for one year.Assume that the corporate tax rate is 35%,the individual capital gains rate is 15% and the individual rate on ordinary income is 30%.
-The amount of additional cash that d'Anconia Copper will have at the end of the year net of corporate taxes is closest to:

• A)$2.0 million
• B)$5.5 million
• C)$6.5 million
• D)$7.0 million

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Definitions:

Business Firms

Organizations involved in the trade of goods, services, or both to consumers, operating in an attempt to profit.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan amount.

Expected Returns

The anticipated profit or loss from an investment, considering all potential outcomes and their probabilities.

Delivery Van

A Delivery Van is a type of vehicle used for transporting goods and products from one location to another, especially in the context of logistical operations or delivery services.