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1. Suppose a project financed via an issue of debt requires five annual interest payments of $12 million each year. If the tax rate is 35% and the cost of debt is 5%, what is the value of the interest rate tax shield?

A) $21.82 million

B) $18.18 million

C) $36.37 million

D) 14.55 million

2. A firm requires an investment of $30,000 and borrows $20,000 at 9%. If the return on equity is 15% and the tax rate is 30%, what is the firm's WACC?

A) 9.20%

B) 11.04%

C) 18.40%

D) 7.36%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92100202

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