-The Interest Tax Shield Is Equal To: A)$0 B)(EBIT -
Question 27
Question 27
Multiple Choice
Anticipated operating income InterestEarnings before taxTax at 30 % Earnings after taxCombined debt and equity income (interest plus earnings after tax) ALL EQUTTY$1,000,000$1,00,000$300,000$700,000$700,000EQUITY AND DEBT$1,000,000$200,000$800,000$−$$ -The interest tax shield is equal to:
A) $0 B) (EBIT - I ) * (1-the tax rate) . C) (equity + debt) * (1-the tax rate) D) the tax rate multiplied by the amount of interest.
Correct Answer:
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