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

question 97

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 in Google pay a 15% tax rate on income from equity and a 25% tax rate on interest income.If Google were to issue sufficient debt to reduce its taxes by $600 million per year permanently,then the effective tax advantage of this debt would be closest to:

• A)10%.
• B)15%.
• C)25%.
• D)30%.

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Definitions:

Pneumatically

Operating or moved by air pressure; often refers to tools, systems, or components that use compressed air to function.

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A type of coupling used for connecting the brake lines between a truck and a trailer, designed for quick and easy connection and disconnection.

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The specific timing at which a device, mechanism, or system is allowed or caused to activate or deactivate.

FMVSS-121

The Federal Motor Vehicle Safety Standard addressing air brake systems in heavy-duty vehicles to ensure safety through performance requirements.