Quiz 15-4 Value of Tax Shields.
Establishment Industries borrows $550 million at an interest rate of 6.2 percent. It expects to maintain this debt level into the far future. What is the present value of interest tax shields? Establishment will pay tax at an effective rate of 30 percent.
Enter interest rate and tax rate as a number not as a percent. Round your fianl answer to the nearest whole million.
------- X ------------- X $___________
PV(Tax shield) = = $ million
The solution explains how to calculate the value of tax shields