ABC Date Enterprise takes out a $40,000 loen to finance the purchase of new physical capital. It must repay the loan in full with interest in one year. The interest rate is 8 percent and the applicable corporate tax rate is 40 percent. What is the present value savings from the deductibility of the interest payment from ABC Data Enterprise's taxes? NOTE Please round your numeric answer to the nearest doller. Do not enter the dollar sign or any commas.

ABC Date Enterprise takes out a $40,000 loen to finance the purchase of new physical capital. It must repay the loan in full with interest in one year. The interest rate is 8 percent and the applicable corporate tax rate is 40 percent. What is the present value savings from the deductibility of the interest payment from ABC Data Enterprise's taxes? NOTE Please round your numeric answer to the nearest doller. Do not enter the dollar sign or any commas.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 14P

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