A Firm Has Interest Expense of $2,500 Each Year for Ten

question 72

Multiple Choice

A firm has interest expense of $2,500 each year for ten years. If the tax rate is 30% and the discount rate is 7%, compute the value of the interest rate tax shield.

• A) $5,744
• B) $5,918
• C) $5,268
• D) $6,987

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Definitions:

Aversive Stimuli

Unpleasant or harmful stimuli that an organism seeks to avoid or escape.

Primary Reinforcer

A reinforcer that is innately satisfying; one that does not take any learning on the organism’s part to make it pleasurable.

Praise

Expression of approval, commendation, or admiration directed at an individual or group.

Money

A medium of exchange, in the form of coins and banknotes, used to facilitate transactions.