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:

Open Floor Plan

An architectural and interior design concept that removes barriers such as walls between different functional areas, such as living, dining, and kitchen spaces.

Public Shared Spaces

Areas accessible to all members of a community, such as parks, plazas, libraries, that are designed for public use and enjoyment.

Open Floor Plan

A layout in buildings, particularly homes, where multiple common areas such as living room, dining room, and kitchen share a large, open space without partition walls.

Productivity

The efficiency at which individuals, companies, or economies produce goods or services, often measured by the output per unit of input.