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

question 38

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 35% tax rate on interest income.If Google were to issue sufficient debt to reduce its corporate taxes by $1 billion 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:

Plant Sources

Refers to plants or parts of plants used as food, materials, or energy.

Overfed

The state of consuming more food energy than the body requires for its basic needs and physical activity, often leading to weight gain.

Undernourished

The condition of having insufficient food or nutrients, leading to health problems related to a deficiency in calories or nutrients.

Glycemic Index

A measure that ranks foods on a scale from 0 to 100 based on the extent to which they raise blood sugar levels after eating.