Boutelle Homes Has 4,000 Bonds Outstanding with a Face Value

Multiple Choice

Boutelle Homes has 4,000 bonds outstanding with a face value of $1,000 each and a coupon rate of 7%. The interest is paid semi-annually. What is the amount of the annual interest tax shield if the tax rate is 40%?

A) $58,000
B) $60,000
C) $72,000
D) $98,000
E) $112,000