If a firm permanently borrows $100 million at an interest rate of 8%, what is the present value of the interest tax shield? (Assume that the marginal corporate tax rate is 30%.)
If a firm permanently borrows $50 million at an interest rate of 10%, what is the present value of the interest tax shield? Assume a 30% marginal corporate tax rate.
German laws and accounting procedures are designed, generally, to protect interests of:
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Present value of interest tax shield = $100 million*8%*30%/8% = $30 million
Present value of interest tax ...
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