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If a Firm Permanently Borrows $100 Million at an Interest

Question 19

Multiple Choice

If a firm permanently borrows $100 million at an interest rate of 8 percent, what is the present value of the interest tax shield? (Assume that the marginal corporate tax rate is 21 percent.)


A) $8.00 million
B) $5.60 million
C) $21.00 million
D) $26.67 million

Correct Answer:

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