It expects to repay the debt at the end of four years

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Reference no: EM132031775

Establishment Industries borrows $760 million at an interest rate of 7.2%. Establishment will pay tax at an effective rate of 35%. What is the present value of interest tax shields if:

a. It expects to maintain this debt level into the far future? (Enter your answer in millions of dollars.)

b. It expects to repay the debt at the end of 4 years? (Enter your answer in millions of dollars rounded to 2 decimal places.)

c. It expects to maintain a constant debt ratio once it borrows the $760 million and rAssets = 10%? (Do not round intermediate calculations. Enter your answer in millions of dollars rounded to 1 decimal place.)

Reference no: EM132031775

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