Multiple Choice
Suppose a Vancouver firm issues perpetual debt with a face and market value of $5,000 and a coupon rate of 12%. If the firm is subject to a 40% tax rate and the appropriate discount rate is 10%,
What is the present value of the interest tax shield?
A) $1,667
B) $2,000
C) $2,400
D) $3,600
E) $6,000
Correct Answer:
Verified
Correct Answer:
Verified
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