Suppose a Project Financed Via an Issue of Debt Requires

question 81

Multiple Choice

Suppose a project financed via an issue of debt requires five annual interest payments of $20 million each year.If the tax rate is 30% and the cost of debt is 5%,what is the value of the interest rate tax shield?

• A)$32.35 million
• B)$22.25 million
• C)$25.98 million
• D)$22.67 million

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Definitions:

Rewarding

Providing a positive response to a behavior, making it more likely to occur again in the future.

Cortical Arousal

The activation level of the brain's cortex, affecting alertness and responses to stimuli; linked to differences in personality traits.

Sensitivity To Stimulation

Refers to the degree of responsiveness or reaction to environmental or sensory stimuli, varying significantly among individuals.

Introvert

A personality trait characterized by a focus on internal feelings rather than external sources of stimulation.