Arnell Industries has $50 million in permanent debt outstanding. The firm will pay interest only on this debt.? Arnell's marginal tax rate is expected to be 30% for the foreseeable future.
a. Suppose Arnell pays interest of 7% per year on its debt. What is its annual interest tax? shield? $___ million (round to 3 decimal places)
b. What is the present value of the interest tax? shield, assuming its risk is the same as the? loan? $___ million (round to 1 decimal place)
c. Suppose instead the interest rate on the debt were 6%. What is the present value of the interest tax shield in this? case? $___ million (round to 1 decimal place)