What is the value of the interest rate tax shield

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Reference no: EM132006584

1. Suppose a project financed via an issue of debt requires five annual interest payments of $22 million each year. If the tax rate is 35% and the cost of debt is 9%, what is the value of the interest rate tax shield?

A. $35.9 million B. $59.9 million C. $30.0 million D. $24.0 million

2. How long will it take to recover an investment of $5,000 at 3% interest rate under the following independent scenarios?

a. $800 anually

b. $100 monthly

c. An increasing gradient of $400 per year

Reference no: EM132006584

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