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    Corporate Finance Study Set 2
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    Exam 15: Capital Structure: Limits to the Use of Debt
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    An Investment Is Available That Pays a Tax-Free 6
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An Investment Is Available That Pays a Tax-Free 6

Question 19

Question 19

Multiple Choice

An investment is available that pays a tax-free 6%.Ignoring risk,what is the pre-tax return on taxable bonds? The corporate tax rate is 35%.


A) 3.50%
B) 6.00%
C) 7.14%
D) 9.23%
E) None of the above.

Correct Answer:

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