Arnell Industries has $ 30 million in permanent debt outstanding. The firm will pay interest only...

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Arnell Industries has $ 30 million in permanent debtoutstanding. The firm will pay interest only on this debt.?Arnell's marginal tax rate is expected to be 30 % for theforeseeable future. a. Suppose Arnell pays interest of 9 % per yearon its debt. What is its annual interest tax? shield? b. What isthe present value of the interest tax? shield, assuming its risk isthe same as the? loan? c. Suppose instead the interest rate on thedebt were 6 %. What is the present value of the interest tax shieldin this? case?

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a Debt 30 million Interest rate 9 per year Tax rate 30 Annual Interest on debt Debt x interest rate 30 million x 9 27 million Annual interest tax shield Annual See Answer

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Arnell Industries has $ 30 million in permanent debtoutstanding. The firm will pay interest only on this debt.?Arnell's marginal tax rate is expected to be 30 % for theforeseeable future. a. Suppose Arnell pays interest of 9 % per yearon its debt. What is its annual interest tax? shield? b. What isthe present value of the interest tax? shield, assuming its risk isthe same as the? loan? c. Suppose instead the interest rate on thedebt were 6 %. What is the present value of the interest tax shieldin this? case?