Use the Information for the Question(s) Below

question 66

Multiple Choice

Use the information for the question(s) below.
Shepard Industries expects free cash flow of $10 million each year. Shepard's corporate tax rate is 35%, and its unlevered cost of equity is 10%. The firm also has outstanding debt of $40 million and it expects to maintain amount of debt permanently.
-Assume that the corporate tax rate is 40%,the personal tax rate on income from equity is 20% the personal rate on interest income is 36%.The effective tax advantage of a corporate issuing debt would be closest to:

• A) 10%
• B) 15%
• C) 25%
• D) 28%

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Definitions:

Psychological Disorders

Mental health conditions characterized by disturbances in thinking, feeling, or behavior that impact daily functioning.

Personality Disorders

Inflexible and enduring behavior patterns that impair social functioning.

DSM-5

The Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition, a classification and diagnostic tool for mental disorders.

Diagnostic Criteria

The specific conditions or behaviors listed in the DSM or other medical references that must be present for a diagnosis of a particular mental or physical health disorder.