Under the assumption that KMS's market share will increase by 0.22% per year, you determine that the plant will require an expansion in 2015, KMS's current outstanding debt, the interest onthe debt, and the interest tax shield are given in the table below. The expansion will cost $21.8 million. Assuming that the financing of the expansion will be delayed accordingly (end of 2015)calculate the projected interest payments and the amount of the projected interest tax shields (assuming that KMS still uses a 10-year bond, interest rates remain the same at 7.1%, and KMS's taxrate is 35%) through 2018.Current values (5000)Outstanding debt before expansionInterest on debt before expansionInterest Tax Shield before expansion2013$4,447$316$1112014$4,447$316$1112015$4,447$316$1112016$4,447$316$111The total projected interest payments beginning in 2015 will be $ (Round to the nearest dollar)2017$4,447$316$1112018$4,447$316$111

A borrower's projected interest payment is the amount of interest they anticipate paying over a…

Answered: Under the assumption that KMS's market…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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