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 interest tax shield if the tax rate is 35 percent?
Annual interest tax shield = Face value of bonds x rate of interest x tax rate
Annual interest tax shield = 5,000 x $1,000 x 7.65% x 35% = $133,875
Answer : $133875 (Thumbs up please)
Lyme Home has 5,000 bonds outstanding with a face value of $1,000 each and a coupon...
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