If a Corporation Has an Average Tax Rate of 40

question 104

Multiple Choice

If a corporation has an average tax rate of 40 percent, the approximate, annual, after-tax cost of debt for a 15-year, 12 percent, $1,000 par value bond, selling at $950 is

• A) 10 percent.
• B) 10.6 percent.
• C) 7.6 percent.
• D) 6.0 percent.

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Definitions:

Deoxyribose

A sugar component of DNA, having one less oxygen atom than ribose, the sugar component of RNA.

Monosaccharide

The simplest form of carbohydrates, consisting of a single sugar molecule such as glucose or fructose.

Polysaccharide

A complex carbohydrate composed of long chains of monosaccharide units bound together by glycosidic linkages, serving various structural and energy storage roles in living organisms.

Cellulose

Cellulose is an organic compound and a polysaccharide consisting of a linear chain of several hundred to many thousands of β(1→4) linked D-glucose units, primarily found in the cell walls of plants.