Reena Industries has $138,000 of debt outstanding that is selling at par and has a coupon rate of 7%. If the tax rate is 21%, what is the present value of the tax shield on debt? A. $28,412 B. $31,010 C. $28,980 D. $3,284 E. $2,029

FINANCIAL ACCOUNTING
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Author:Libby
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Chapter1: Financial Statements And Business Decisions
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Reena Industries has $138,000 of debt outstanding that is
selling at par and has a coupon rate of 7%.
If the tax rate is 21%, what is the present value of the tax
shield on debt?
A. $28,412
B. $31,010
C. $28,980
D. $3,284
E. $2,029
Transcribed Image Text:Reena Industries has $138,000 of debt outstanding that is selling at par and has a coupon rate of 7%. If the tax rate is 21%, what is the present value of the tax shield on debt? A. $28,412 B. $31,010 C. $28,980 D. $3,284 E. $2,029
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