Use the Information for the Question(s) Below

question 32

Multiple Choice

Use the information for the question(s) below.
KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt. KD has had consistently stable earnings, and pays a 15% tax rate. Management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares.
-The present value of KD's interest tax shield is closest to:

• A) $130 million
• B) $200 million
• C) $400 million
• D) $70 million

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Definitions:

Skin-Fold Technique

A method to estimate body fat percentage by measuring the thickness of skin folds at specific body sites.

Body-Mass Index

A numerical computation comparing a person's weight and height, used to assess if they are underweight, overweight, or within a healthy weight range.

Metabolic Syndrome

A cluster of conditions including increased blood pressure, high blood sugar, excess body fat around the waist, and abnormal cholesterol levels, which occur together and increase the risk of heart disease, stroke, and diabetes.

Excessive Abdominal Fat

An unhealthy accumulation of fat in the stomach area, which is linked to increased risk of cardiovascular disease and diabetes.