Question
Capital Budgeting XYZ enterprise currently issues bond of $5 million with 10% interest rate. XYZ plans to issue $1 million more bonds at the end
Capital Budgeting
XYZ enterprise currently issues bond of $5 million with 10% interest rate. XYZ plans to issue $1 million more bonds at the end of each year for the next 5 years. If XYZ’s marginal corporate tax rate is 40%, what is the interest tax shield form XYZ’s bond in each of the 5 years?
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
| Debt | | | | | | |
| Interest | | | | | | |
| Tax shield | | | | | | |
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Financial Algebra advanced algebra with financial applications
Authors: Robert K. Gerver
1st edition
978-1285444857, 128544485X, 978-0357229101, 035722910X, 978-0538449670
