4. The income statement for E.C. Builders (ECB) is shown below. Given its marginal corporate tax rate of 35%, what is the amount of the interest tax shield for ECB in years 2010 through 2013? Calculate the present value of the tax shield, assuming that the interest rate of debt is 7%. 2010 3369 -2359 2011 3706 -2584 2012 4077 -2867 2013 4432 -3116 ECB Income Statement ($M) Total Sales Cost of Sales Administrative Exp. Depreciation Operating income Other income EBIT Interest expense Income before tax Taxes (35%) Net Income -226 -22 762 7 769 -50 719 -252 467 -248 -25 849 8 857 -80 777 -272 505 -276 -27 907 10 917 -100 817 -286 531 -299 -29 988 12 1000 -100 900 -315 585 5. Suppose that company A borrows $2 billion by issuing 15-year bonds. Comanche's cost of debt is 7%, and then repay the principal of $2 billion in year 15. Comanche's marginal tax rate will remain 39% throughout this period. By how much does the interest tax shield increase the value of Company A? 6. Because the probability that the Fed reduces the interest rates, there would be the option of reducing the cost of debt to 6% at the end of year 5. What would be the increase of value of Company A then