Liz's Home Remedy Has a $24 Million Bond Issue Outstanding

Multiple Choice

Liz's Home Remedy has a $24 million bond issue outstanding with a coupon rate of 7.75 percent and a current yield of 7.67 percent. What is the present value of the tax shield if the tax rate is 34 percent?

A) $632,400
B) $625,872
C) $6.28 million
D) $8.16 million
E) $8.68 million