Use the Following Information to Answer the Question(s)below

question 85

Multiple Choice

Use the following information to answer the question(s) below.
Google Corporation has no debt on its balance sheet in 2008,but paid $1.6 billion in taxes.Assume that Google's marginal tax rate is 35% and Google's borrowing cost is 7%.
-Assume that investors hold Google stock in retirement accounts that are free from personal taxes.If Google were to issue sufficient debt to reduce its taxes by $600 million per year permanently,then the value that would be created is closest to:

• A)$6.4 billion.
• B)$8.6 billion.
• C)$9.8 billion.
• D)$14.3 billion.

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Definitions:

Relationships

Connections or associations between people, groups, or objects, characterized by a certain level of involvement or interaction.

Subalternate

In Aristotelian logic, a term that refers to the relationship between particular and universal propositions where the truth of the universal necessitates the truth of the particular.

Quality

A measure of how good something is in relation to similar types of things; its level of excellence.

Quantity

The property that describes the amount or number of material or immaterial things.