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Memphic Memphic
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6 years ago
The present value of Wyatt's annual interest tax shield is closest to:
A) $4.2 million
B) $7.0 million
C) $40 million
D) $60 million
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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wrote...
6 years ago
C
Explanation:  C) Annual interest tax shield = Debt × Interest × Tax rate = $100 million × 7% × 40% = $2.8 million
PV Tax shield =   =   = $40 million
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