The Globe Incorporated Has EBIT of $20 Million for the Current

question 42

Multiple Choice

The Globe Incorporated has EBIT of $20 million for the current year.On the firm balance sheet,there is $80 million of debt outstanding that carries a coupon rate of 8 percent.Investors seek a return of 12 percent on the firm,and the firm has a corporate tax rate of 40%.What is the present value of the firm's tax shields?

• A) $32,000,000
• B) $30,000,000
• C) $24,000,000
• D) $6,400,000

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Definitions:

Résumé

A document summarizing a person's background, including education, work experience, and skills, used for job applications.

Appropriate Emphasis

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Knowledge Of The Company

An understanding of a company's history, values, culture, and products, often considered crucial for job applicants and employees.

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