Use the Following Information to Answer the Question(s)below

question 71

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 taxes by $1 billion per year permanently,then the effective tax advantage of this debt would be closest to:

• A)10%.
• B)15%.
• C)25%.
• D)30%.

---

Definitions:

Instantaneous Changes

Rapid alterations in a system or process that occur in a nearly zero time frame, often used in physics to describe acceleration or in finance for stock price movements.

Rule-Based Scheduling

A method of organizing tasks or operations based on a set of predetermined rules to optimize performance or resource allocation.

Critical Ratio Sequencing

A prioritizing technique used in production scheduling where jobs are sequenced based on the ratio of the remaining time to due date to the remaining work.

Prioritizes Jobs

Refers to the process or system used to determine the order in which jobs or tasks should be completed, typically aiming to optimize productivity and efficiency.