What Is the Amount of Annual Interest Tax Shield for a Firm

question 15

Multiple Choice

What is the amount of annual interest tax shield for a firm with $3 million in debt that pays 12% interest if the corporate tax rate is 35%?

• A)$126,000
• B)$234,000
• C)$360,000
• D)$1,050,000

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Definitions:

Positive Correlation

A relationship between two variables where an increase in one variable is associated with an increase in the other.

Academic Success

Achieving high grades or attaining a high level of performance in an educational setting.

Intelligence

The ability to learn, understand, and apply knowledge and skills in problem-solving situations.

Naturalistic Observation

A research method where subjects are observed in their natural environment without any manipulation by the researcher, to ensure behavior is observed naturally and authentically.