Suppose a Project Financed Via an Issue of Debt Requires

question 76

Multiple Choice

Suppose a project financed via an issue of debt requires five annual interest payments of $10 million each year.If the tax rate is 30% and the cost of debt is 6%,what is the value of the interest rate tax shield?

• A)$11.35 million
• B)$12.21 million
• C)$13.20 million
• D)$12.64 million

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Definitions:

Securities Act

A U.S. law enacted in 1933 that requires transparency in the sale of securities to protect investors from fraud and misleading information.

Hazards

Potential sources of harm or adverse health effects on individuals or populations, often categorized as physical, chemical, biological, ergonomic, or psychosocial.

Worker's Compensation System

A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue their employer for negligence.

Third-Party Beneficiaries

Individuals or entities that benefit from a contract despite not being a party to the contract themselves.