Use the Information for the Question(s)below

question 19

Essay

Use the information for the question(s)below.
KD Industries has 30 million shares outstanding with a market price of $20 per share and no debt.KD has had consistently stable earnings,and pays a 35% tax rate.Management plans to borrow $200 million on a permanent basis through a leveraged recapitalization in which they would use the borrowed funds to repurchase outstanding shares.
-Assume the following tax schedule:
Personal Tax Rates Considering the effect of personal taxes,calculate the PV of the interest tax shield provided by KD's recapitalization in 2005.

---

Definitions:

Limbs

The appendages of the human body or of animals, such as arms, legs, wings, or fins, that are used for movement or manipulation.

Monogamous Bonds

A type of relationship where an individual has a sexual and romantic partnership exclusively with one person at a time.

Evolutionary History

The study of the origin, development, and changes among species over time, elucidating the relationships among living organisms.

Lorises

Small, nocturnal primates found in Southeast Asia and parts of South Asia, characterized by their slow movement and large eyes.