Debt tax shield
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A company issues a one-year bond with a face value of $25 million. The bond has a coupon rate of 8%. What are the minimum (accounting) earnings that the company has to have in order to fully capture the debt tax shield.
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Solution Summary
The solution explains how to determine the minimum earnings so as to fully capture the debt tax shield
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The earning before interest and tax should be equal to the interest amount so that the earnings ...
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