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Arnell Industries has $ 30 million in permanent debtoutstanding. The firm will pay interest only on this debt.?Arnell's marginal tax rate is expected to be 30 % for theforeseeable future. a. Suppose Arnell pays interest of 9 % per yearon its debt. What is its annual interest tax? shield? b. What isthe present value of the interest tax? shield, assuming its risk isthe same as the? loan? c. Suppose instead the interest rate on thedebt were 6 %. What is the present value of the interest tax shieldin this? case?
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