General Accounting Reena Industries has $138,000 of debt outstanding that isselling at par and has a coupon rate of 7%.If the tax rate is 21%, what is the present value of the taxshield on debt?A. $28,412B. $31,010C. $28,980D. $3,284E. $2,029

The present value of the tax shield on debt can be calculated using the following formula:PV of tax…

Answered: Reena Industries has $138,000 of debt…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Edwards Construction currently has debt outstanding with a market value of $75,000. The company has a WACC of 9 percent and has EBIT of $8,750 in the next year. The tax rate is 20%. What is the debt-to-value ratio if the EBIT’s growth rate is 5%? a. 42.86% b. 39.33% c. 96.42% d. 32.45%
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Subject:- finance
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Reena Industries has $138,000 of debt outstanding that is selling at par and has a coupon rate of 7%. If the tax rate is 21%, what is the present value of the tax shield on debt? A. $28,412 B. $31,010 C. $28,980 D. $3,284 E. $2,029