ALPHA is a consumer staples' firm with no debt outstanding and a market value of $500 million. ALPHA is considering borrowing $150 million and buying back its stock. Assuming that the interest rate on debt is 6% and the firm faces a tax rate of 34%. Estimate the present value of interest savings if the debt is perpetual and the current market interest rate is 8%.

Question 5 options:

	$30.56 million
	$38.25 million
	$17.50 million
	$25.71 million