Gold Inc. requires $50,000 of capital for a proposed expansion. The company's president and CEO is trying to decide whether to issue preferred shares with a fixed dividend rate of 5% or to borrow from the bank at a rate of 7%. Gold Inc. pays a corporate tax rate of 27%. If the expansion is funded with the bank loan, how much corporate income will be required to service the interest?

	$945
	$3,500
	$4,795
	$2,555

If corporate income is over $500,000 a key factor to consider in analyzing the dividend/salary policy of a corporation is the benefit of tax deferral versus the cost of double taxation.

	True
	False