Multiple Choice
The corporate tax rate is 37%.The MaPol Company has a $100 million debenture issue outstanding with a coupon rate of 6.84% per annum.Face value of one debenture is $10 000 and investors require a 7% return on debentures with similar credit rating.What is the present value of the tax shield?
A) $25 300 800
B) $7 000 000
C) $6 840 000
D) $30 160 000
E) $37 000 000
Correct Answer:
Verified
Correct Answer:
Verified
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