Company ABC has $10 million in permanent debt outstanding. The firm will pay interest only on this debt. The marginal tax rate is expected to be 30% for the foreseeable future. Suppose ABC pays interest of 6% per year on its debt. What is the present value of the interest tax shield, assuming its risk is the same as the loan?

Select one:

a. 1.8 million

b. 0.6 million

c. 3.0 million

d. 3.2 million

e. 2.9 million