× Didn't find what you were looking for? Ask a question
Top Posters
Since Sunday
5
o
5
4
m
4
b
4
x
4
a
4
l
4
t
4
S
4
m
3
s
3
New Topic  
johnpaech johnpaech
wrote...
Posts: 1098
Rep: 7 0
6 years ago
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
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 78 times
2 Replies

Related Topics

Replies
wrote...
6 years ago
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
johnpaech Author
wrote...
5 years ago
You took a load off my back, thanks for answering correctly
New Topic      
Explore
Post your homework questions and get free online help from our incredible volunteers
  944 People Browsing
Related Images
  
 62
  
 1132
  
 305
Your Opinion
Which 'study break' activity do you find most distracting?
Votes: 741