Can you answer this?

In September of 1995, McDonalds Corporation issued $150 million of Senior Notes due in

2005. The notes were issued at par and bore interest of 6 5/8%, paid semi-annually (i.e.,

interest of $33.125 per $1000, bond would be paid twice a year). The debt was rated AA by

Moodys. Interest payments on this debt were deductible for corporate tax purposes (you

may assume that McDonalds's marginal corporate tax rate was 35%), though principal

repayments were not. All principal would be repaid in September 2005.

B. How many dollars of taxes will McDonalds save each year through the deduction of the

interest expense on these notes from taxable income (you may assume that McDonalds will

have sufficient taxable income in future years to cover the interest expense on this debt)?

What is the present value of these future tax savings?