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

question 38

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

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Definitions:

Report

A Report is a detailed written or spoken account of something that has been observed, checked, or investigated, often used to convey information in business, research, or news contexts.

Dorsal Roots

Nerve fibers that carry sensory information from the body to the spinal cord, part of the central nervous system.

Ventral Roots

The efferent motor root of a spinal nerve, through which motor neurons exit the spinal cord.

Spinal Nerves

Nerves that emerge from the spinal cord, crucial for transmitting motor, sensory, and autonomic signals between the spinal cord and the body.