Multiple Choice
What is the annual tax shield to a firm that has a capital structure consisting of $100 million of debt and $180 million of equity, if the average interest rate on debt is 9%, the return on equity is 13%, and the marginal tax rate is 40%?
A) $9.0 million
B) $5.4 million
C) $9.36 million
D) $3.6 million
Correct Answer:
Verified
Correct Answer:
Verified
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