The firm had been entirely equity financed

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Reference no: EM131561347

In the year ending October 2007, Walmart paid out $1, 929 million as debt interest. Assume an interest rate of 6% and a corporate tax rate of 35%.

a. How much more tax would Walmart have paid if the firm had been entirely equity- financed?

b. What would be the present value of Walmart's interest tax shield if the company planned to keep its borrowing permanently at the 2007 level?

Reference no: EM131561347

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