What is this amount in present value if it is assumed

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Reference no: EM133433801

Question: A company is a manufacturing company that has no outstanding debt and has a market value of $120 million. It is thinking of borrowing $35 million to buy its own shares. Interest on loans is 12% and tax is 42%. Answer the following questions: What is the tax savings for the year on the debt, what is this amount in present value if it is assumed that it is permanent, what is it if it is assumed that the debt is only for 10 years and what will be the present value this interest is taxed on savings if the interest rate drops to 6% but the debt remains unchanged (forever on the one hand and for 10 years on the other).

1. 1,368,000; 15,200,000; 8,779,356; 15,200,000; 6,712,399

2. 1,216,000; 15,200,000; 8,159,459; 15,200,000; 6,712,399

3. 1,260,000; 14,000,000; 8,086,249; 15,200,000; 6,712,399

4. 912,000; 11,400,000; 6,119,594; 11,400,000; 5,034,300

5. 1,764,000; 14,700,000; 9,966,993; 14,700,000; 6,491,597

6. 2,520,000; 14,000,000; 11,325,097; 11,400,000; 5,034,300

Reference no: EM133433801

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