Question
Braxton Enterprises currently has debt outstanding of $65 million and an interest rate of 8%. Braxton plans to reduce its debt by repaying $13 million
Braxton Enterprises currently has debt outstanding of $65 million and an interest rate of 8%. Braxton plans to reduce its debt by repaying $13 million in principal at the end of each year for the next five years. If Braxton's marginal corporate tax rate is 40%, 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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