If a Corporation Has an Average Tax Rate of 40

question 88

Multiple Choice

If a corporation has an average tax rate of 40 percent, the approximate annual, after-tax cost of debt for a 10-year, 8 percent, $1,000 par value bond selling at $1,150 is ________.

• A) 3.6 percent
• B) 4.8 percent
• C) 6 percent
• D) 8 percent

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Definitions:

Canadian Intellectual Property Office

A government agency responsible for the administration and processing of the intellectual property system in Canada.

Copyrights

Legal rights granted to an author, composer, playwright, publisher, or distributor to exclusively print, publish, perform, film, or record literary, artistic, or musical material.

Finite Intangible Asset

An intangible asset that has a specific life span after which its value diminishes or becomes null.

Amortized

The process of paying off a debt or loan in regular installments over a set period of time, which includes both principal and interest.