15. Arnell Industries has $55 million in permanent debt outstanding. The firm will pay interest only on this debt. Arnell's marginal tax rate is expected to be 22% for the foreseeable future. a. Suppose Arnell pays interest of 9% per year on its debt. What is its annual interest tax shield? b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? c. Suppose instead the interest rate on the debt was 6%. What is the present value of the interest tax shield in this case?

16. Rogot Instruments makes fine violins, violas, and cellos. It has $1.1 million in debt outstanding, equity valued at $2.5 million, and pays corporate income tax at a rate of 23%. Its cost of equity is 11% and its cost of debt is 7%. a. What is Rogot's pre-tax WACC? b. What is Rogot's (effective after-tax) WACC?