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:

Bureaucratic Reform

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Elite Democrats

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