Markum Enterprises is considering permanently adding an additional $71 million of debt to its capital structure.Markum's corporate
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Question:
Markum Enterprises is considering permanently adding an additional
$71 million of debt to its capital structure.Markum's corporate tax rate is
38%.
a. Absent personaltaxes, what is the value of the interest tax shield from the newdebt?
b. If investors pay a tax rate of
45% on interestincome, and a tax rate of
30% on income from dividends and capitalgains, what is the value of the interest tax shield from the newdebt?
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