Your firm has a $250,000 bond issue outstanding. These bonds have a 7% coupon,pay interest semiannually,and have a current market price equal to 103% of face value. What is the amount of the annual interest tax shield given a tax rate of 35%?
A) $6,125
B) $6,309
C) $9,500
D) $17,500
E) $18,025

Question

Quizplus · Accepted Answer

The Answer of Your firm has a $250,000 bond issue outstanding. These bonds have a 7% coupon,pay interest semiannually,and have a current market price equal to 103% of face value. What is the amount of the annual interest tax shield given a tax rate of 35%?
A) $6,125
B) $6,309
C) $9,500
D) $17,500
E) $18,025

Your Firm Has a $250,000 Bond Issue Outstanding