Suppose a Project Financed Via an Issue of Debt Requires

question 93

Multiple Choice

Suppose a project financed via an issue of debt requires six annual interest payments of $20 million each year. If the tax rate is 30% and the cost of debt is 8%, what is the value of the interest rate tax shield?

• A) $32.64 million
• B) $23.20 million
• C) $31.35 million
• D) $27.74 million

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Financial Statements

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