Refer to Exhibit 7A

question 6

Multiple Choice

Refer to Exhibit 7A.1.What is the nominal dollar value of the interest tax savings to the firm in the third year of the issue? Do not round your intermediate calculations.

• A) ​$54.42
• B) ​$45.12
• C) ​$46.51
• D) ​$36.28
• E) ​$50.70

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Definitions:

Project Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated by dividing the present value of future cash flows by the initial investment cost.

Internal Rate Of Return

The discount rate at which the net present value of an investment project is zero; the rate of return of a project over its useful life.

Preference Ranking

A system or method used to arrange or prioritize options based on their desirability or value from a subjective viewpoint.

Investment Projects

Initiatives undertaken by businesses or individuals to allocate resources, often capital, with the expectation of generating future returns.