Assuming that the corporation has a 21% MTR, which of the following statements is true?
A) Jacky, Inc. borrowed $500,000 and paid interest of $48,000; the after-tax cost of the interest was $37,920.
B) Jacky, Inc issued 1,000 shares of 7%, $100 par preferred stock for $100,000. The after-tax cost of the $7,000 dividend paid was $5,530.
C) Jacky, Inc issued 1,000 shares of 7%, $100 par preferred stock for $100. The after-tax cost of the $7,000 dividend paid was $1,470.
D) Jacky, Inc. borrowed $500,000 and paid interest of $48,000; the after-tax cost of the interest was $10,080.
Correct Answer:
Verified
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