CFA Practice Question

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CFA Practice Question

Nature's Plan Inc. has 10,000 bonds outstanding, each with a face value of $1,000 and a coupon payment of $55 every six months. If the corporate tax rate is 34%, what is the interest tax shield each year?

A. $374,000
B. $976,000
C. $187,000
Correct Answer: A

User Contributed Comments 5

User Comment
nhla Coupon payment for the year is 55*2 = 110
sarath Tax shield means tax rebate...
johntan1979 Thanks nhla and sarath!
schweitzdm Thanks for the explanation nhla & sarath
cfastudypl good job nhla and sarath, well done guys.
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