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Assume you are doing a financial analysis for Kroger Inc. Here is one of the income statements that you analyze (all figures in $ Millions):

Assume you are doing a financial analysis for Kroger Inc. Here is one of the income statements that you analyze (all figures in $ Millions):

Year

2006

2005

2004

Total Sales

60,553

56,434

53,791

Cost of goods sold

45,565

42,140

39,637

Selling, general & admin expenses

11,688

12,191

11,575

Depreciation

1265

1256

1209

Operating Income

2035

847

1370

Other Income

0

0

0

EBIT

2035

847

1370

Interest expense

510

557

604

Earnings before tax

1525

290

766

Taxes (35%)

534

102

268

Net Income

991

189

498

Which year does Kroger Incorporation have the highest tax shield and why? Be very specific.

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