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

question 60

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)$6.1 billion.
• B)$10.2 billion.
• C)$12.2 billion.
• D)$14.3 billion.

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Definitions:

Systematic Desensitization

A therapeutic technique aimed at reducing fear or anxiety, by gradually exposing the patient to the anxiety-producing stimulus while teaching relaxation strategies.

Aversion Therapy

A psychological treatment method that uses negative stimuli to reduce or eliminate unwanted behaviors.

Behavioral Therapist

A mental health professional who uses techniques based on behavioral and cognitive psychology to treat psychological disorders and promote mental health.

Fear-Evoking Stimulus

An object, event, or situation that induces fear.