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

question 85

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 hold Google stock in retirement accounts that are free from personal taxes.If Google were to issue sufficient debt to reduce its taxes by $600 million per year permanently,then the value that would be created is closest to:

• A)$6.4 billion.
• B)$8.6 billion.
• C)$9.8 billion.
• D)$14.3 billion.

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Definitions:

Kahneman And Tversky

Psychologists noted for their work on the psychology of judgment and decision-making, as well as behavioral economics.

Risks

Potential events or actions that may cause loss or hinder achievement of objectives.

Probability Of Success

The likelihood of achieving a goal or completing a task successfully, often expressed as a percentage.

American Sign Language (ASL)

A complete, natural language that serves as the predominant sign language of Deaf communities in the United States and most of Anglophone Canada.