The Benefits of Debt

question 79

Multiple Choice

The benefits of debt. A firm plans to issue $1 million worth of debt at a YTM of 9%. The debt is trading at par. The firm's marginal corporate tax rate is 35%. What is the present value of the tax savings in perpetuity?

• A) $11,025
• B) $20,475
• C) $350,000
• D) $227,500

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Definitions:

Policy Practice

The application of policy analysis and development in real-world settings to achieve desired outcomes.

Versatility

The ability to adapt or be adapted to many different functions, activities, or situations effectively.

Policy Advocacy

The act of actively promoting and pushing for changes in public policy to advance a specific cause or agenda.

Policy Agenda

A set of policies or issues that are prioritized by policymakers or a government entity at a given time.