Ten years have passed since arnell issued 17 million in, Ask an Expert

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Ten years have passed since Arnell issued $17 million in perpetual interest only debt with a 5 % annual coupon. Tax rates have remained the same at 35 % but interest rates have dropped, so Arnell's current cost of debt capital is 3 %.

a. What is Arnell's annual interest tax shield? The interest tax shield is $ _____. ? (Round to three decimal places.)

b. What is the present value of the interest tax shield today? The present value of the interest tax shield is $ _______ million.?(Round to two decimal places.)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92271582

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