Total After tax cash Cash outflows Tax shields deductions outflows= Cash Year =Interest + Depreciation Interest =Deductions =Depr + outflows- Deductions Principal repaid 0.35 Interest after tax 1 1734000 1275000 459000 1734000 693600 1040400
Total After tax cash Cash outflows Tax shields deductions outflows= Cash Year =Interest + Depreciation Interest =Deductions =Depr + outflows- Deductions Principal repaid 0.35 Interest after tax 1 1734000 1275000 459000 1734000 693600 1040400
Chapter7: Types And Costs Of Financial Capital
Section: Chapter Questions
Problem 2aM
Related questions
Question
How did you compute the tax shield? because when I multiply the total dedcution with the rate, it gives me a different answer.
![Step 4
Total
After tax cash
Cash outflows
Tax shields
deductions
outflows= Cash
Year =Interest +
Depreciation
Interest
=Deductions *
=Depr +
outflows- Deductions
Principal repaid
0.35
Interest
after tax
1
1734000
1275000
459000
1734000
693600
1040400
1619250
1275000
344250
1619250
647700
971550
3
1504500
1275000
229500
1504500
601800
902700
4
1389750
1275000
114750
1389750
555900
833850
3748500](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F63b47b45-9095-467d-8ee6-91c6b5ef5e1a%2Fb388a88c-5921-4983-bc89-9a5bfd4d6a81%2Fh986a6o_processed.png&w=3840&q=75)
Transcribed Image Text:Step 4
Total
After tax cash
Cash outflows
Tax shields
deductions
outflows= Cash
Year =Interest +
Depreciation
Interest
=Deductions *
=Depr +
outflows- Deductions
Principal repaid
0.35
Interest
after tax
1
1734000
1275000
459000
1734000
693600
1040400
1619250
1275000
344250
1619250
647700
971550
3
1504500
1275000
229500
1504500
601800
902700
4
1389750
1275000
114750
1389750
555900
833850
3748500
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