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

question 71

Multiple Choice

Use the following information to answer the question(s) below.
Google Corporation has no debt on its balance sheet in 2008,but paid $1.6 billion in taxes.Assume that Google's marginal tax rate is 35% and Google's borrowing cost is 7%.
-Assume that investors in Google pay a 15% tax rate on income from equity and a 35% tax rate on interest income.If Google were to issue sufficient debt to reduce its taxes by $1 billion per year permanently,then the effective tax advantage of this debt would be closest to:

• A)10%.
• B)15%.
• C)25%.
• D)30%.

---

Definitions:

Natural Liberty

The concept of being free to pursue one's own life and goals, without interference from others or the state, as long as one does not harm others.

Moral Liberty

Describes the freedom to act in accordance with one's ethical beliefs and principles without external constraint.

Male Authority

The dominance or control traditionally held by men in various social, political, and familial contexts.

Puritans

A group of English Reformed Protestants in the 16th and 17th centuries who sought to "purify" the Church of England from its "Catholic" practices.