Arnell Industries has $$10$ 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 $10\%$ 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 were $5\%.$ What is the present value of the interest tax shield in this case?

a$.$ Suppose Arnell pays interest of $10\%$ per year on its debt. What is its annual interest tax shield?

If Arnell pays interest of $10\%$ per year on its debt, the annual interest tax shield is $$0\mathrm{.}220$ million. $($Round to three decimal places.$)$

b$.$ What is the present value of the interest tax shield, assuming its risk is the same as the loan?

The present value of the interest tax shield is $$2\mathrm{.}2$ million. $($Round to one decimal place.$)$

c$.$ Suppose instead the interest rate on the debt were $5\%.$ What is the present value of the interest tax shield in this case?

If instead the fair interest rate on the debt is $5\%,$ the present value of the interest tax shield is $ million. $($Round to one decimal place.$)$