Ecb borrows 2000000 usds by issuing 4-year bonds ecbs cost, Ask an Expert

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ECB borrows $2000000 USDs by issuing 4-year bonds. ECB's cost of debt is 6%, so it will need to pay $120000 USDs in interest each year for the next 4 years, and then repay the principal $2000000 USD in year 4. ECB's marginal tax rate will remain 35 throughout this period. By how much (in USDs) does the interest tax shield increase the value of ECB?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92063450

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