Your firm currently has $80 million in debt outstanding with a 8% interest rate. The terms of the loan require the firm to repay $20 million of the balance each year. Suppose that the marginal corporate tax rate is 21%, and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this debt? (Round to two decimal places.) P15-10Rogot Instruments makes fine violins and cellos. It has $1.2 million in debt outstanding, equity valued at$2.7 million and pays corporate income tax at rate 21%. Its cost of equity is 11% and its cost of debt is 8%. What is Rogot's pretax WACC? (Round to two decimalplaces.)What is Rogot's (effective after-tax) WACC? (Round to two decimalplaces.)

Hi student Since there are multiple questions, we will answer only first question In case of debt…

Your firm currently has $80 million in debt outstanding with a 8% interest rate. The terms of the loan require the firm to repay $20 million of the balance each year. Suppose that the marginal corporate tax rate is 21%, and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this debt? (Round to two decimal places.)

Your firm currently has $80 million in debt outstanding with a 8% interest rate. The terms of the loan require the firm to repay $20 million of the balance each year. Suppose that the marginal corporate tax rate is 21%, and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this debt? (Round to two decimal places.)

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter13: Other Financing Alternatives

Section: Chapter Questions

Problem 1bM

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