Using the following expected interest payments, cost of debt 5%, and tax-rate = 21%, calculate the TAX SHIELD. %3D Expected interest year 1 = 50; year 2 35; year 3 = 20; year 4 10; 5 = 0 %3D !3! %3D O 101.36 O 158.33 82.85 O 46.37

Using the following expected interest payments, cost of debt 5%, and tax-rate = 21%, calculate the TAX SHIELD. %3D Expected interest year 1 = 50; year 2 35; year 3 = 20; year 4 10; 5 = 0 %3D !3! %3D O 101.36 O 158.33 82.85 O 46.37

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter4: Time Value Of Money

Section4.17: Amortized Loans

Problem 1ST

See similar textbooks

Related questions

Q: Part A Using the following free cash flows and cost of equity = 7%, discount FCF year 1 back to time…

A: Hi, there, Thanks for posting the question. As per our Q&A honour code, we must answer the first…

Q: 1. You have the following information Interest charges = JD 50 000 per year Tax rate = 40% Net…

A: Given: Interest charges =JD 50000 per yearTax rate =40%Net Income =JD 90000

Q: Find the equivalent future worth of the following payments. Use 6% interest rate compounded…

A: Interest Rate = 6% Compounded Annually Month Month (in Years) = Month / 12 Cash Flow 0 0.00…

Q: Assume that the nominal after-tax net return for year 1: $45, year 2: $47, year 3: $49. The after…

A: Present value refers to the current value of the investments that is computed by discounting the…

Q: 7. Comparing Taxable and Tax-Free Yields. With a 28 percent marginal tax rate, would a tax-free…

A: Taxation is the procedure that is used by the government to receive revenue to the government. It is…

Q: D4) What is the interest income in dollars on a $10 million art financing loan priced at 8%…

A: A loan under which the borrower pledges his/her asset to get the loan is known as a collateral loan.…

Q: A. Compute for the simple interest given the Principal, interest rate, and term 1. P = Php10,000 2.…

A: Principal Interest rate Period P r t 10000 4.50% 5 500000 15% 10

Q: If the proceeds of a loan of P12,450 will be paid with P12,840 at the end of 1 year and 9 months.…

A: Loan amount = P 12450 Par value = P 12840 Discount amount = Par value-Loan amount…

Q: FRM. (Term=30 years, Note Rate = 5.25, Loan Amount = 800,000, Points=2) What is the FTL annual…

A: Time period is 30 years Loan amount is 800,000 Points =2 To Find: Annual percentage rate

Q: 8. What is the equivalent worth in year 5 of the following series of income and disbursements, if…

A: Equivalent worth is the value based on the time value of money which is equivalent to all expenses…

Q: Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, calculate the…

A: Given information,YearExpected Interest15023532041050Cost of debt: Tax rate: To calculate,Tax shield

Q: A saving account earns a nominal rate i(©) = 0.06. If the income tax of the earnings from this…

A: The amount that is being received by an individual today has more value than receiving the exact…

Q: Assuming a 14% interest rate, which of the following is closest to the total present value of the fo…

A: PRESENT VALUE Present Value is the Current Value of Future Cash Flow at a Discounting Rate. Present…

Q: Task: Assume that at time 0 a sum L is lent for a series of n yearly payments. The rth payment, of…

A: Since 'L' amount is lent in exchange of yearly payments having specific interest rates, therefore, L…

Q: Use the following amortization chart: Selling price of home Down payment Principal (loan) Rate of…

A: The question is related to Interest Cost. The Interest cost is calculated with the help of following…

Q: At what interest rate will the given principal P earn the given simple interest /in the given term…

A: P = Principal I = Simple interest t = time period i = interest rate I = P×i×t Simple interest =…

Q: To find the after-tax interest rate, the before tax interest rate is multiplied by _-- If the…

A: “Since you have posted multiple questions, we will solve first question for you. If you want any…

Q: Assume that l2t = 0.25% and that lit = 0. If the one-year interest rate is 5% and the two-year…

A: Preferred Habitat Theory: Investors have different preferences for maturity when it comes to bonds,…

Q: Consider a perpetuity with a coupon of 100. Imagine that the perpetuity is purchased at time t when…

A: Given that;Rate of interest is 5%Income tax rate is 40%

Q: You borrow money on a self liquidating installment loan (equal payments at the end of each year,…

A: Hi, since you have posted a question with multiple sub-parts, we will answer the first three as per…

Q: If the Dept displacement rate 6% and cost of borrowing machine is 10% , and the adjusted discount…

A: Marginal tax rate: The marginal tax rate is the additional tax paid for each additional dollar of…

Q: Calculate Interest Coverage ratio from the following details NPAT is 97,500 Tax Rate is 35%…

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: 2. Muhammad invest $12,000 in a GIC paying 2.25% effective annual interest. Muhammad computes his…

A: The formula used is shown:

Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%,
calculate the TAX SHIELD.
%3D
Expected interest year 1 = 50; year 2 35; year 3 = 20; year 4 10; 5 = 0
%3D
!!
%3!
O 101.36
O 158.33
82.85
O 46.37

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1Basic Information

VIEW

Step 2 Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, calculate the TAX SHIELD. Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 a) 101.36 b) 46.37 c) 158.33 d) 82.85
Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, calculate the TAX SHIELD. Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 Group of answer choices 101.36 158.33 82.85 46.37
Using the same data for 2 parts: Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21% Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 Part A) Discount the year 4 expected payment back to time 0 (today). a) 9.31 b) 10.11 c) 13.65 d) 6.50 Part B) Calculate the Tax Shield a) 101.36 b) 46.37 c) 158.33 d) 82.85
Using the following expected interest payments, cost of debt = 5%, and tax-rate = 21%, discount the year 4 expected payment back to time 0 (today). Expected interest year 1 = 50; year 2 = 35; year 3 = 20; year 4 = 10; 5 = 0 a) 9.31 b) 10.11 c) 13.65 d) 6.50
1. You have the following information Interest charges = JD 50 000 per year Tax rate = 40% Net Income= JD 90 000 Required: What is the fim's times-interest-earned (TIE) ratio?
Assume that the nominal after-tax net return for year 1: $45, year 2: $47, year 3: $49. The after tax risk adjusted discount rate is 6%, the growth rate is 3%, and the inflation rate is 4%. What is the present value of the after-tax net return? O $125.42 O $134.62 O $158.47 None of the answers are correct
A saving account earns a nominal rate i©) = 0.06 . If the income tax of the earnings from this account is at 25%, and suppose the annual inflation is at 2.4%, what is the annual after tax real rate of return? 0.0216 0.0275 0.0205 0.0366
Assume that l2t =0.25% and that l1t = O. If the one-year interest rate is 5% and the two-year interest rate is 5.75%, then i1 is equal to: O A.6% O B. 5.75% O C. 5.50% O D. 5.25%
7. Comparing Taxable and Tax-Free Yields. With a 28 percent marginal tax rate, would a tax-free yield of 7 percent or a taxable yield of 9.5 percent give you a better return on your savings? Why? ADV V71. -- nere to search 17 40 101 %23 3. $4 4 7. 986
To find the after-tax interest rate, the before tax interest rate is multiplied by If the current and expected future one-year interest rates are 5%, 6%, 7%, using the expectations theory of the term structure, the three-year interest rate is ___? If the current and expected future one-period interest rates are 5%, 6%, 7%, 5% and 5%, and the liquidity premium is 0.4%, the five-period interest rate is A steep yield curve indicates that interest rates are expected to future. in the An inverted yield curve may be due to a Federal Reserve policy of increasing short- term interest rates to fight what economic problem?
Problem 8. What is the equivalent worth in year 5 of the following series of income and disbursements, if the interest rate is 10% per year? Year Income, S 0 0 1-5 6000 6-8 6000 9-14 8000 Answer: Equation: CFD: Expense, S 9000 6000 3000 5000
If the Dept displacement rate 6% and cost of borrowing machine is 10% , and the adjusted discount rate = 7.6% .So what is the Marginal tax rate ? write the formula.