D.L.Tuckers has $21,000 of debt outstanding that is selling at par and has a coupon rate of 7.5 percent.The tax rate is 32 percent.What is the present value of the tax shield?
A)$504
B)$615
C)$644
D)$6,200
E)$6,720

Name: D.L.Tuckers has $21,000 of debt outstanding that is selling at par and has a coupon rate of 7.5 percent.The tax rate is 32 percent.What is the present value of the tax shield? A)$504 B)$615 C)$644 D)$6,200 E)$6,720
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Question

Quizplus · Accepted Answer

Present value of the tax shield = 0.32 × $21,000 = $6,720

DLTuckers Has $21,000 of Debt Outstanding That Is Selling at Par