Under the assumption that KXS's market share will be 0.29% higher in each subsequent year, you determine that the plant will require an expansion in 2020. The expansion will cost $21.7 million. Assuming that the financing of the expansion will be delayed accordingly (end of 2020), calculate the projected interest payments and the amount of the projected interest tax shields through 2023 (assuming that KXS still uses a 10-year bond, interest rates remain the same at 7.1%, and KXS's tax rate is 35%). Current values ($000) 2018 $4,429 $314 2019 2020 2021 2022 $4,429 $314 2023 $4,429 $4,429 $4.429 Outstanding debt before expansion nterest on debt before expansion nterest tax shield before expansion $4,429 $314 $314 $314 $314 $110 $110 $110 $110 $110 $110 The total projected interest payments starting in 2021 will be S (Round to the nearest dollar.)
Under the assumption that KXS's market share will be 0.29% higher in each subsequent year, you determine that the plant will require an expansion in 2020. The expansion will cost $21.7 million. Assuming that the financing of the expansion will be delayed accordingly (end of 2020), calculate the projected interest payments and the amount of the projected interest tax shields through 2023 (assuming that KXS still uses a 10-year bond, interest rates remain the same at 7.1%, and KXS's tax rate is 35%). Current values ($000) 2018 $4,429 $314 2019 2020 2021 2022 $4,429 $314 2023 $4,429 $4,429 $4.429 Outstanding debt before expansion nterest on debt before expansion nterest tax shield before expansion $4,429 $314 $314 $314 $314 $110 $110 $110 $110 $110 $110 The total projected interest payments starting in 2021 will be S (Round to the nearest dollar.)
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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Transcribed Image Text:Under the assumption that KXS's market share will be 0.29% higher in each subsequent year, you determine that the plant will require an expansion in 2020. The expansion will cost $21.7 million. Assuming that the financing of the expansion will be delayed
accordingly (end of 2020), calculate the projected interest payments and the amount of the projected interest tax shields through 2023 (assuming that KXS still uses a 10-year bond, interest rates remain the same at 7.1%, and KXS's tax rate is 35%).
Current values ($000)
2018
2019
2020
2021
2022
2023
$4,429
$4,429
$4,429
$4,429
$4,429
$4,429
Outstanding debt before expansion
Interest on debt before expansion
$314
$314
$314
$314
$314
$314
Interest tax shield before expansion
$110
$110
$110
$110
$110
$110
.....
The total projected interest payments starting in 2021 will be $ (Round to the nearest dollar.)
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