Ernie's has 4,200 bonds outstanding with a face value of $1,000 each,a market value of $1,060 each,and a coupon rate of 7.6 percent.What is the amount of the annual interest tax shield if the tax rate is 35 percent?
A)$118,423
B)$99,714
C)$100,780
D)$111,720
E)$102,250

Question

Quizplus · Accepted Answer

Annual interest tax shield = 4,200 × $1,000 × 0.076 × 0.35 = $111,720

Ernie's Has 4,200 Bonds Outstanding with a Face Value of $1,000