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Braxton Enterprises currently has debt outstanding of $35 million and an interest rate of 8%. Braxton plans to reduce its debt by repaying $7 million
Braxton Enterprises currently has debt outstanding of
$35
million and an interest rate of
8%.
Braxton plans to reduce its debt by repaying
$7
million in principal at the end of each year for the next five years. If Braxton's marginal corporate tax rate is
25%,
what is the interest tax shield from Braxton's debt in each of the next five years?
Question content area bottom
Part 1
The interest tax shield in year one is
million. (Round to three decimal places.)
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