Used for share repurchase

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Reference no: EM13750059

d'Anconia Copper has $200 million in cash that is used for share repurchase. Suppose instead that d'Anconia Copper invests the funds in an account paying 5% interest for one year. Assume that the corporate tax rate is 35%, the individual gain rate is 15% and the individual rate on ordinary income is 30%.

The amount of additional cash that d'Anconia Copper will have at the end of the year net of corporate taxes is closet to:

a. $2.0 million

b. $5.5 million

c. $7.0 million

d. $6.5 million

Reference no: EM13750059

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