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:

Self-regulation Theory

A theory that focuses on individuals' control of their own behavior and emotions, aiming for goal achievement.

Higgins's

Referring to the theories or models proposed by psychologist Tory Higgins, often related to self-discrepancy theory and motivation.

Prevention

Actions or measures taken to stop something undesirable, such as illness or accidents, from happening.

Congruence

The agreement or harmony between thoughts, feelings, and behaviors, or the geometric concept where figures are identical in shape and size.