13&14

13. Interest Tax Shield. Fleury Co. has a 38 percent tax rate. Its total interest payment for the year just ended was $32 million. What is the interest tax shield? How do you interpret this amount? 14. M\&M. Guerin Enterprises has no debt. Its current total value is $70 million. Ignoring taxes, what will the company's value be if it sells $32 million in debt? Suppose now that the company's tax rate is 40 percent. What will its overall value be if it sells $32 million in debt? Assume debt proceeds are used to repurchase equity