Determining the interest tax shield each year


The Merlin Company is currently unlevered and is considering a new project that will cost $100,000 and generate $32,000 in after tax cash flows indefinitely. They plan to partially finance the project with $60,000 of debt at cost of 9%. If they expect to continue to be in a 34% corporate tax bracket what will be their interest tax shield each year?

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Finance Basics: Determining the interest tax shield each year
Reference No:- TGS041323

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