Without leverage, Impi Corporation will have net income next year of $7.5 million. If Impi's corporate tax rate is 21% and it pays 9% interest on its debt, how much additional debt can Impi issue this year and still receive the benefit of the interest tax shield next year? (Note: Assume Impi's revenues exceed $24 million, and that interest tax deductions are limited to 30% of EBIT under the TCJA.)

Without leverage, Impi Corporation will have net income next year of $7.5 million. If Impi's corporate tax rate is 21% and it pays 9% interest on its debt, how much additional debt can Impi issue this year and still receive the benefit of the interest tax shield next year? (Note: Assume Impi's revenues exceed $24 million, and that interest tax deductions are limited to 30% of EBIT under the TCJA.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 11P: The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are...

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