Which year Kroger Incorporation has the highest tax shield and why?

) Discuss MM Proposition I and MM Proposition II (definition, assumptions, results and implications)?

Assume you are doing financial analysis for Kroger Inc. Here is one of the income statements that you are interested (all figures in $ Millions):

Year	2006	2005	2004
Total Sales	60,553	56,434	53,791
Cost of goods sold	45,565	42,140	39,637
Selling, general & admin expenses	11,688	12,191	11,575
Depreciation	1265	1256	1209
Operating Income	2035	847	1370
Other Income	0	0	0
EBIT	2035	847	1370
Interest expense	510	557	604
Earnings before tax	1525	290	766
Taxes (35%)	534	102	268
Net Income	991	189	498