Use the Information for the Question(s) Below

question 3

Multiple Choice

Use the information for the question(s) below.
LCMS Industries has $70 million in debt outstanding. The firm will pay only interest on this debt (the debt is perpetual) . LCMS' marginal tax rate is 35% and the firm pays a rate of 8% interest on its debt.
-Assuming that the risk is the same as the loan,the present value of LCMS' interest tax shield is closest to:

• A) $45.5 million
• B) $20.0 million
• C) $24.5 million
• D) $35.0 million

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Definitions:

Epiphyses

The ends of long bones, where growth in length occurs during childhood and adolescence.

Long Bones

Bones that are longer than they are wide and serve as levers for movement, such as the femur.

Collagen Fibers

Strong, fibrous proteins found in connective tissues, providing structural support and elasticity to skin, tendons, and ligaments.

Hydrochloric Acid

A strong acid composed of hydrogen and chlorine, found in the stomach, where it aids in digestion.