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d. l. tuckers has $57,000 of debt outstanding that is selling at par and has a coupon rate of 7.15 percent. the tax rate is 21 percent. what is the present value of the tax shield?

Respuesta :

The present value of the tax shield is $11,970.

What is meant by tax shield?

In economics, tax shield refers the allowable deduction from taxable income that results in a reduction of taxes owed.

Here we have to find the the present value of the tax shield.

Through the given question we know that,

Debt outstanding = $57,000

Coupon rate = 7.15%

Tax rate = 21%

Then the tax shield is calculated as,

Here the Calculation of PV (present value) of interest TS (tax shield)-

PV of interest TS  = (Tax Rate x Debt value)

= (21% x $57000)

Thus, the resulting tax shield is $11,970.

To know more about Tax shield here.

https://brainly.com/question/28556871

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