Question
Steven has $100 of outstanding debt, on which it pays an interest rate = 15%/year. Its corporate income tax rate = 20%. Its full income
Steven has $100 of outstanding debt, on which it pays an interest rate = 15%/year. Its corporate income tax rate = 20%. Its full income statement is as follows:
Revenues = $400
COGS = $300
Expenses = $80
EBIT= $20
Interest = $15
EBT = $5
Tax @ 20% = $1
Net Income = $4
What is the dollar value of Stevens interest tax shield?
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Personal Finance
Authors: Jack Kapoor, Les Dlabay, Robert Hughes
4th Edition
0256147175, 978-0256147179
