1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mylen [45]
3 years ago
5

Arnell Industries has $35 million in permanent debt outstanding. The firm will pay interest only on this debt. Arnell's marginal

tax rate is expected to be 30% for the foreseeable future. a. Suppose Arnell pays interest of 9% per year on its debt. What is its annual interest tax shield? b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? c. Suppose instead the interest rate on the debt were 7%. What is the present value of the interest tax shield in this case?
Business
1 answer:
gladu [14]3 years ago
7 0

Answer:

a. Annual Interest tax shield = Debt * Interest * Tax Rate

Annual Interest tax shield = $35 million *9% *30%

Annual Interest tax shield = $0.945 million

b. PV of tax shield = $35 million *9% *30% / 9%

PV of tax shield = $10.50  million

c. PV of tax shield at 7% = 35million *7% *30% / 7%

PV of tax shield at 7% = $10.50 million

You might be interested in
A developer of a new townhome community estimates that there will be 1,200 home (all types) sales in University City over the ne
Rashid [163]

PAnswer:

24 units

Explanation:

Calculation to determine what is the developer's first-year projection of townhome sales in the new community

First-year projection=10%*1200*20%

First-year projection=24 units

Therefore the developer's first-year projection of townhome sales in the new community is 24 units

3 0
3 years ago
Among foragers the status of women declines when they provide most of the food. men and women are equal; there is no gender ineq
Yuki888 [10]

Answer:

Whats the question??

Explanation:

3 0
3 years ago
When making replacement decisions, the development of relevant cash flows is complicated when compared to expansion decisions.
fgiga [73]

Answer: True

Explanation:

Decision regarding an asset replacement is usually based on both the internal rate of return and the net present value of the incremental cash flows.

Therefore, it should be noted that this brings about the complications when comparing the development of relevant cash flows to the expansion decisions.

4 0
3 years ago
Put each word in the category it goes in
iren [92.7K]

STEM is Science, Tech, Engineering, and Math

7 1
3 years ago
Read 2 more answers
national savings is equal to the sum of private savings and public savings. to make our notation a bit easier, we will call nati
slamgirl [31]

Here, public savings = $1.05 billion and private savings = $3.15 billion

It is calculated as follows:

Total savings, S = $4.20 billion

We know: S = V+U

It means National Savings = Private savings + Public savings

Here:

V = private savings , U = public savings and

Private saving, V = 0.75 × S

 = 0.75 × $4.20 billion

 = $3.15 billion

And, the public savings will be = National savings - private savings

= $4.20 billion - $3.15 billion

= $1.05 billion

To know more about savings here:

brainly.com/question/10749354

#SPJ4

3 0
2 years ago
Other questions:
  • Electronic cover letters should still follow a business letter format, even though e-mail is a less formal type of communication
    9·2 answers
  • Gracey's Department Stores has $200,000 of 6% noncumulative, nonparticipating, preferred stock outstanding. Gracey's also has $6
    14·1 answer
  • Which of the following is true about product​ markets?
    12·1 answer
  • Why is not a good practice to save everything on a desktop
    14·1 answer
  • A firm's database showed that the average value of all inventory items for the year was $7,650. The cost of goods sold was repor
    11·1 answer
  • Last year, Ricardo sold a piece of unimproved real estate to Cliff for $20,000. Ricardo acquired the property 15 years ago at a
    12·1 answer
  • __________ refer to the tendency to overestimate the influence of personality factors when interpreting the actions of people
    5·1 answer
  • An investor contributes $100,000 of cash to a partnership and signs a $200,000 recourse note. During the first year, the investo
    5·1 answer
  • Why do companies frequently expand their business operations into other countries?
    10·1 answer
  • You just purchased a share of SPCC for $100. You expect to receive a dividend of $5 in one year. If you expect the price after t
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!