Question
Bay Transport Systems (BTS) currently has $50 million in debt outstanding. In addition to 9.0% interest, it plans to repay 6% of the remaining balance
Bay Transport Systems (BTS) currently has
$50
million in debt outstanding. In addition to
9.0%
interest, it plans to repay
6%
of the remaining balance each year. If BTS has a marginal corporate tax rate of
21%,
and if the interest tax shields have the same risk as the loan, what is the present value of the interest tax shield from the debt?
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Capital Markets Institutions And Instruments
Authors: Frank J. Fabozzi, Franco Modigliani
4th Edition
0136026028, 9780136026020
