Suppose a Project Financed Via an Issue of Debt Requires

question 72

Multiple Choice

Suppose a project financed via an issue of debt requires six annual interest payments of $20 million each year.If the cost of debt is 8%,and the present value of the interest rate tax shield is $27.74 million,what is the firm's tax rate?

• A)25%
• B)30%
• C)33%
• D)35%
• E)40%

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