5. Barrick Industries has just issued $450 million in debt (at par). The firm will...
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5. Barrick Industries has just issued $450 million in debt (at par). The firm will pay interest only on this debt. (Assume it will be a permanent part of the capital structure.) Barrick's marginal tax rate is expected to be 30% for the foreseeable future. a. Suppose Barrick pays interest of 6% per year on its debt. What is its annual interest tax shield? b. What is the present value of the interest tax shield? c. Suppose instead that the interest rate on the debt is 8%. What is the present value of the interest tax shield in this case
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