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38. A firm has expected before-tax earnings of $2,000,000 a year in perpetuity. The firm can borrow at the rate of 10%. The corporate tax
38. A firm has expected before-tax earnings of $2,000,000 a year in perpetuity. The firm can borrow at the rate of 10%. The corporate tax is 35%. To ensure the tax reduction can always be realised in the same year as the interest payment, the firm should borrow no more than a dollar amount of: A. 2,000,000 B. 20,000,000 C.9,000,000
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