Lyme Home Has 5,000 Bonds Outstanding with a Face Value

Multiple Choice

Lyme Home has 5,000 bonds outstanding with a face value of $1,000 each and a coupon rate of 7.65 percent.Interest is paid semiannually.What is the amount of the annual tax shield on debt if the tax rate is 23 percent?

A) $157,650
B) $160,125
C) $1,062,500
D) $1,150,000
E) $87,975