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Title: The interest tax shield provided by Omicron's new project in year 1 is closest to: Post by: johnpaech on Nov 20, 2017 The interest tax shield provided by Omicron's new project in year 1 is closest to:
A) $3.00 B) $1.05 C) $50.25 D) $17.60 Title: Re: The interest tax shield provided by Omicron's new project in year 1 is closest to: Post by: deusmaroto on Nov 20, 2017 B
Explanation: B) rwacc = rE + rD (1 - τc), where D = net debt = Debt - Cash rwacc = (.12) + (.06)(1 - .35) = .0876 = + + = $125.69 D0 = d × D0 = ($125.69) = $50.28 So, Interest tax shield in year 1 = 50.28(.06)(.35) = 1.055880 or 1.06 Title: Re: The interest tax shield provided by Omicron's new project in year 1 is closest to: Post by: johnpaech on Aug 1, 2018 You took a load off my back, thanks for answering correctly
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