Multiple Choice
If a firm borrows $50 million for one year at an interest rate of 10 percent, what is the present value of the interest tax shield? Assume a 21 percent marginal corporate tax rate.
A) $0.95 million
B) $1.50 million
C) $1.00 million
D) $4.55 million
Correct Answer:
Verified
Correct Answer:
Verified
Related Questions
Q44: The existence of personal taxes on interest
Q45: Explain the impact of government loan guarantees
Q46: How is Modigliani-Miller's Proposition I modified when
Q47: Although the use of debt provides tax
Q48: In order to find the present value
Q50: MM's Proposition I corrected for the inclusion
Q51: The MM theory with taxes implies that
Q52: The pecking order theory implies that firms
Q53: Given corporate taxes, why does adding debt
Q54: What signal is sent to the market