Suppose a Project Financed Via an Issue of Debt Requires

question 81

Multiple Choice

Suppose a project financed via an issue of debt requires five annual interest payments of $20 million each year.If the tax rate is 30% and the cost of debt is 5%,what is the value of the interest rate tax shield?

• A)$32.35 million
• B)$22.25 million
• C)$25.98 million
• D)$22.67 million

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