Question
DBF borrows $2.46B by issuing 20-year bonds. ECB's cost of debt is 5.48%, so it will need to pay interest each year for the next
DBF borrows $2.46B by issuing 20-year bonds. ECB's cost of debt is 5.48%, so it will need to pay interest each year for the next 20 years, and then repay the principal $2.46B in year 20. ECB's marginal tax rate will remain 38% throughout this period. By how much does the interest tax shield increase the value of DBF?
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CFIN
Authors: Scott Besley, Eugene Brigham
5th edition
1305661656, 9781305888036 , 978-1305666870
