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What is the present value of the tax shield of a company that has the following characteristics. Company value is $1.2 million. Tax rate is
What is the present value of the tax shield of a company that has the following characteristics. Company value is $1.2 million. Tax rate is 40%, and the interest rate on the debt is 8%. The cost of equity is 15% and the company has 100,000 shares outstanding valued at $8/share. a. $16,000 b. $12,800 c. $160,000 d. $32,000 e. $4,000
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