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Both parts please Under the assumption that KMS's market share will increase by 0.25% per year, you determine that the plant will require an expansion
Both parts please
Under the assumption that KMS's market share will increase by 0.25% per year, you determine that the plant will require an expansion in 2018, KMS's current outstanding debt, the interest on the debt, and the interest tax shield are given in the table below. The expansion will cost $20.2 million. Assuming that the financing of the expansion will be delayed accordingly (end of 2018), calculate the projected interest payments and the amount of the projected interest tax shields (assuming that KMS still uses a 10-year bond, interest rates remain the same at 6.5%, and KMS's tax rate is 35%) through 2021 2019 Current values ($000) Outstanding debt before expansion Interest on debt before expansion Interest Tax Shield before expansion 2016 2017 2018 2020 2021 $4,720 $307 $107 $4,720 $307 $107 $4,720 $307 $107 $4,720 S307 S107 $4,720 $307 $107 $4,720 $307 $107 The Tax Cuts and Jobs Act of 2017 temporarily allows 100% bonus depreciation effectively expensing capital expenditures). However, we will still include depreciation forecasting in this chapter and in these problems in anticipation of the return of standard depreciation practices during your careerStep by Step Solution
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