Value of the interest tax shield from the new debt

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Reference no: EM132000931

Markum Enterprises is considering permanently adding an additional $193 million of debt to its capital structure. Markum's corporate tax rate is 30%. 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 30 % on interest income, and a tax rate of 20 % on income from dividends and capital gains, what is the value of the interest tax shield from the new debt?

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 30 % on interest income, and a tax rate of 20 % 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 30 % on interest income, and a tax rate of 20% 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: EM132000931

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