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Establishment Industries borrows $870 million at an interest rate of 8.3%. Establishment will pay tax at an effective rate of 21%. What is the present
Establishment Industries borrows $870 million at an interest rate of 8.3%. Establishment will pay tax at an effective rate of 21%. What is the present value of interest tax shields if: a. It expects to maintain this debt level into the far future? (Enter your answer in millions of dollars rounded to 1 decimal place.) b. It expects to repay the debt at the end of 6 years? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 2 decimal places.) c. It expects to maintain a constant debt ratio once it borrows the $870 million and Assets = 10%? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 1 decimal place.) $ Present value Present value Present value 182.7 million million million
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