Reena Industries Has $138,000 of Debt Outstanding That Is Selling

question 45

Multiple Choice

Reena Industries has $138,000 of debt outstanding that is selling at par and has a coupon rate of 7 percent.If the tax rate is 21 percent,what is the present value of the tax shield on debt?

• A)$28,412
• B)$31,010
• C)$28,980
• D)$3,284
• E)$2,029

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Definitions:

Merge

To combine or unite multiple entities, such as companies or datasets, into one integrated whole.

Short-form Merger

A short-form merger is a type of merger that allows a parent company to absorb a subsidiary without the approval of the shareholders of the subsidiary.

Shareholder Approval

The process by which a corporation's shareholders vote on and approve certain corporate actions or decisions.

Revised MBCA

An updated version of the Model Business Corporation Act, which provides a template for state laws regulating the formation, operation, and dissolution of corporations.