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Interest tax shield from the new? debt

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Reference no: EM131669519

Markum Enterprises is considering permanently adding an additional $123 million of debt to its capital structure.? Markum's corporate tax rate is 38%.

a. Absent personal? taxes, what is the value of the interest tax shield from the new? debt?

b. If investors pay a tax rate of 45% on interest? income, and a tax rate of 30% on income from dividends and capital? gains, what is the value of the interest tax shield from the new? debt?

a. Absent personal? taxes, what is the value of the interest tax shield from the new? debt?

In the absence of personal? taxes, the value of interest tax shield from new debt should be $____ million.

? (Round to two decimal? places.)

b. If investors pay a tax rate of 45% on interest? income, and a tax rate of 30% on income from dividends and capital? gains, what is the value of the interest tax shield from the new? debt?

If investors pay a tax rate of 45% on interest? income, and a tax rate of 30% on income from dividends and capital? gains, the value of the interest tax shield from new debt should be $_____ million. ? (Round to two decimal? places.)

Reference no: EM131669519

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