A Firm Has 3,500 Bonds Outstanding with a Face Value

Multiple Choice

A firm has 3,500 bonds outstanding with a face value of $1,000 each and a coupon rate of 8.5%.The interest is paid semi-annually.What is the amount of the annual interest tax shield if the tax rate is 40%?

A) $81,600
B) $90,100
C) $101,200
D) $119,000
E) $122,000