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:

Health Care Spending

The total expenditure on health services by individuals, insurance companies, and governments, including the cost of medical products, treatments, and preventive services.

U.S. Health Care Expenditures

The total amount of money spent on health care services and products in the United States, including private and public spending.

GDP

The sum of the market or monetary value of all produced finished goods and services within a nation's boundaries over a particular timeframe is known as the Gross Domestic Product.

Dual System

A concept or system that involves two separate or parallel operational modes or structures.