16.4 Wal-Mart's borrowing reduced taxable profits by $1,929 million. With a tax rate of 35%, tax was
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16.4 Wal-Mart's borrowing reduced taxable profits by $1,929 million. With a tax rate of 35%, tax was reduced by .35 x $1,929 = $675.2 million. If the borrowing is permanent, Wal- Mart will save this amount of tax each year. The present value of the tax savings would be $675.2/.06 $11,253 million.
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Fundamentals Of Corporate Finance
ISBN: 9780073382302
6th Edition
Authors: Richard A Brealey, Stewart C Myers, Alan J Marcus
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