Lyme Home has 5,000 bonds outstanding with a face value of $1,000 each and a coupon rate of 7.65 percent. Interest is paid semiannually. What is the amount of the annual tax shield on debt if the tax rate is 23 percent?

Multiple Choice

a. $87,975

b. $157,650

c. $1,062,500

d. $160,125

e. $1,150,000