A Firm Has Interest Expense of $2,500 Each Year for Ten

question 72

Multiple Choice

A firm has interest expense of $2,500 each year for ten years. If the tax rate is 30% and the discount rate is 7%, compute the value of the interest rate tax shield.

• A) $5,744
• B) $5,918
• C) $5,268
• D) $6,987

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Definitions:

Medicinal

Referring to substances or practices used in the treatment of illness or to enhance physical or mental health.

Wheat

A cereal grain, originally from the Levant region of the Near East and Ethiopian Highlands, that is a global staple food.

Corn

A cereal plant (Zea mays) that produces large kernels on a cob; also used to refer to the kernels themselves, which are a staple food in many parts of the world.

Natural Ecosystems

Natural ecosystems are biological communities that interact with their physical environment, functioning through naturally occurring processes without significant human intervention.