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

question 12

Multiple Choice

Use the following information to answer the question(s) below.
Wyatt Oil issued $100 million in perpetual debt (at par) with an annual coupon of 7%.Wyatt will pay interest only on this debt.Wyatt's marginal tax rate is expected to be 40% for the foreseeable future.
-Wyatt's annual interest tax shield is closest to:

• A)$2.8 million
• B)$4.2 million
• C)$7.0 million
• D)$40 million

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Definitions:

Covert-nondestructive

Relates to hidden actions or processes that do not cause physical damage.

Overt-destructive

Openly aggressive behaviors that result in physical or emotional harm to oneself or others.

Juvenile Training Center

A facility designed for the incarceration, education, and rehabilitation of young offenders.

Treatment Foster Care

A child welfare service model where children are placed in the homes of trained foster caregivers, who provide specialized care and support aimed at addressing the children's complex emotional and behavioral needs.