Reference no: EM132758536

Question: The Sigma Company plans to establish a subsidiary in Poland to Manufacture and sell fashion wristwatches. Sigma has total assets of $150 million, of which $105 million is equity financed. The remainder if financed with debt. Alpha considered its current capital structure optimal, the construction cost of the Polish facility in Zloty (Polish currency or PLN) is estimated at PLN 37,920,000, of which PLN 28,440,000 is to be financed at a below-market borrowing rate arranged by the Polish government. What amount of debt should Sigma use in calculating the tax shields on interest payments in its capital budgeting analysis.