Kelner's Nursery Has 8000 Bonds Outstanding with a Face Value

Multiple Choice

Kelner's Nursery has 8000 bonds outstanding with a face value of $1000 each.The coupon rate is 6.5 per cent and the tax rate is 34 per cent.What is the present value of the interest tax shield?

A) $3.26 million
B) $2.72 million
C) $3.09 million
D) $3.13 million
E) $2.83 million