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Aliun [14]
3 years ago
12

Jasmine's Boutique has 2,000 bonds outstanding with a face value of $1,000 each and a coupon rate of 9 percent. The interest is

paid semiannually. What is the amount of the annual interest tax shield if the tax rate is 34 percent?A. $58,500B. $60,750C. $60,100D. $62,250E. $61,200
Business
1 answer:
irakobra [83]3 years ago
8 0

Answer:

E. $61,200

Explanation:

total interest expense = 2,000 bonds x $1,000 per bond x 9% = $180,000

the interest shield is the amount of taxes saved by paying interest expense

interest shield = total interest expense x tax rate = $180,000 x 34% = $61,200

this means that the company will be able to reduce its income taxes by $61,200 because it paid interests on their bonds

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Phil owns 150 acres in fee simple absolute. These 150 acres are known as his ownership

<h3>What is ownership?</h3>

Ownership is the legal possession and control of property, which can be any tangible or intangible asset. Ownership can involve multiple rights, referred to collectively as title, that can be separated and held by different parties.

The legal right of an individual, group, corporation, or government to possess a thing is referred to as ownership. Material and immaterial things are the two types of subjects of ownership. Material ownership refers to tangible items such as property, land, a car, a book, and so on.

The legal right to use, possess, and give away something is defined as ownership. Ownership can be of tangible things like personal property and land, or of intangible things like intellectual property rights.

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