Question
Braxton Enterprises currently has debt outstanding of $55 million and an interest rate of 8%. Braxton plans to reduce its debt by repaying $11 million
Braxton Enterprises currently has debt outstanding of $55 million and an interest rate of 8%. Braxton plans to reduce its debt by repaying $11 million in principal at the end of each year for the next five years. If Braxton's marginal corporate tax rate is 30%, what is the interest tax shield from Braxton's debt in each of the next five years?
The interest tax shield in year one is $? million.
The interest tax shield in year two is $? million
The interest tax shield in year three is $? million
The interest tax shield in year four is $? million
The interest tax shield in year five is $? million
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