Schiffauer Electronics plans to issue 10-year, zero coupon bonds with a par value of $1,000.00 and a yield to maturity of 5.00%. The company has a tax rate of 30.00%. How much extra in taxes would the company pay (or save) the second year (at t = 2) if it goes ahead and issues the bonds? Do not round your intermediate calculations.
A. $8.80
B. $10.35
C. $9.96
D. $7.45
E. $9.67
Answer: E
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