Your firm has just taken a 4 - year interest - only loan of $ 150,000 at an interest rate of 8 % . The terms of the loan require you to make annual interest payments over the next 4 years . At the end of Year 4 , you will repay the entire principal of $ 150,000 in a single , lump - sum payment . The table below show the interest payments you'll be making over the next 4 years.

year1: $12000

Year2: $12000

Year3: $12000

Year4: $12000

If the applicable tax rate is 25%, what is the present value of interest tax shields associated with this loan?

A. $9509.60

B. $28339.20

C. $37500

D.$7084.80

E. $39,745.52