Ernie's Has 3,500 Bonds Outstanding with a Face Value of $1,000

question 60

Multiple Choice

Ernie's has 3,500 bonds outstanding with a face value of $1,000 each and a coupon rate of 8.5 percent.What is the amount of the annual interest tax shield if the tax rate is 34 percent?

• A)$98,500
• B)$99,100
• C)$100,750
• D)$101,150
• E)$102,250

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Definitions:

Pollution Prevention

The practice of reducing or eliminating waste and pollutants at their sources, prior to recycling, treatment, or disposal.

Freshwater Lake

A large body of standing water that contains low concentrations of dissolved salts, distinct from sea water, providing habitat for a diverse range of organisms.

Cultural Eutrophication

The process by which water bodies become enriched with nutrients from human activity, leading to excessive growth of algae and deterioration of water quality.

Game Fish

Describes species of fish targeted for recreational fishing, often subject to specific regulations regarding their capture, to conserve and manage populations.