. Question Please compute the tax advantage of debt in terms of overall income to all capital providers that firm B has compared to firm A. EBIT Debt ratio Interest paid (10% interest rate) EBT Tax (36%) Net income to shareholders Net income to bondholders Income to all capital providers Interest tax shield Firm A 3691 0% 0 Firm B 3691 35% 431 Table 2: Firm profits and financing expenses, and taxes for firms A and B.