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

question 85

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 hold Google stock in retirement accounts that are free from personal taxes.If Google were to issue sufficient debt to reduce its taxes by $600 million per year permanently,then the value that would be created is closest to:

• A)$6.4 billion.
• B)$8.6 billion.
• C)$9.8 billion.
• D)$14.3 billion.

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Definitions:

DNA

Deoxyribonucleic acid, a molecule that carries the genetic instructions for the development, functioning, and reproduction of all living organisms.

Genes

Segments of DNA located on chromosomes that contain the instructions for the production of proteins, playing a key role in determining the characteristics of an organism and its mode of inheritance.

Lanugo

Fine, downlike covering of the fetus.

Fetus

A fetus refers to a developing mammal or human after the embryonic stage and before birth, characterized by rapid growth and the formation of body structures.