Establishment Industries borrows $870 million at an interest rate of 8.3%. Establishment will pay tax at an effective rate of 35%. What is the present value of interest tax shields if:
a. It expects to maintain this debt level into the far future? (Enter your answer in millions of dollars.)
b. It expects to repay the debt at the end of 6 years? (Enter your answer in millions of dollars rounded to 2 decimal places.)
c. It expects to maintain a constant debt ratio once it borrows the $870 million and rAssets = 10%? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 1 decimal place.)
a) Tax shield = 870 million * 8.3%
= 72.21 million
b) in millions
1 | ₹ 72.21 |
2 | ₹ 60.18 |
3 | ₹ 48.14 |
4 | ₹ 36.11 |
5 | ₹ 24.07 |
6 | ₹ 12.04 |
Establishment Industries borrows $870 million at an interest rate of 8.3%. Establishment will pay tax at...
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