The interest tax shield year 1 is ______$ million (Round to three decimal places)The interest tax shield year 2 is ______$ million (Round to three decimal places)The interest tax shield year 3 is ______$ million (Round to three decimal places)The interest tax shield year 4 is ______$ million (Round to three decimal places)The interest tax shield year 5 is ______$ million (Round to three decimal places) Braxton Enterprises currently has debt outstanding of $45 million and an interest rate of 6%. Braxton plans to reduceits debt by repaying $9 million in principal at the end of each year for the next five years. If Braxton's marginalcorporate tax rate is 21%, what is the interest tax shield from Braxton's debt in each of the next five years?

concept. Interest tax shield = Interest amount * tax rate.

The interest tax shield year 1 is ______$ million (Round to three decimal places) The interest tax shield year 2 is ______$ million (Round to three decimal places) The interest tax shield year 3 is ______$ million (Round to three decimal places) The interest tax shield year 4 is ______$ million (Round to three decimal places) The interest tax shield year 5 is ______$ million (Round to three decimal places)

The interest tax shield year 1 is $ million (Round to three decimal places) The interest tax shield year 2 is $ million (Round to three decimal places) The interest tax shield year 3 is $ million (Round to three decimal places) The interest tax shield year 4 is $ million (Round to three decimal places) The interest tax shield year 5 is __$ million (Round to three decimal places)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 19P

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A $100,000 loan can be obtained at a 10 percent rate with monthly payments over a 15-year term.a. What is the after-tax effective interest rate on the loan, assuming the borrower is in a 30 percent tax bracket and the loan is held only three years? Assume that the benefit of interest deductions for tax purposes occurs at the same time payments are made.b. Calculate the after-tax effective cost for the above loan, assuming 5 points are charged and that the points are tax-deductible at the time they are paid.c. How does the after-tax cost in part (b) compare with the pretax effective cost of the loan?
Please include calculations: A $100,000 loan can be obtained at a 10 percent rate with monthly payments over a 15-year term. a. What is the after-tax effective interest rate on the loan, assuming the borrower is in a 30 percent tax bracket and the loan is held only three years? Assume that the benefit of interest deductions for tax purposes occurs at the same time payments are made. b. Calculate the after-tax effective cost for the above loan, assuming that 5 points are charged and that the points are tax deductible at the time they are paid. c. How does the after-tax cost in part (b) compare with the pretax effective cost of the loan?
Your company pays 8.76% on short-term debt, 6.31% on long-term debt, and 8.66% on any additional long-term debt it raises through its AFN program. If your company currently has $51.50 million in short-term debt, $550.00 million in long-term debt, and plans to raise $100.00 million AFN, what will the total interest expense be for the year? Note: your answer should be in millions of dollars.
Fenland Company plans to retire $200 million in bonds in five years. To save for the retirement, the company plans to make annual deposits into an account at the beginning of each year during that period. The account is expected to earn 10% interest compounded annually. At the end of the five years, there needs to be enough money in the account to pay off the bonds. What amount does Fenland need to invest ot the beginning of each year? Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (EV of $1. PV of $1. EVA of $1.PVA of $1. EVAD of S1 and PVAD Ost Multiple Choice $31043,977 $37388,727 Cannot be determined from the given information $29781404
Travis International has a debt payment of $2.36 million that it must make 4 years from today. The company does not want to come up with the entire amount at that time, so it plans to make equal monthly deposits into an account starting 1 month from now to fund this liability. If the company can earn a return of 5.43 percent compounded monthly, how much must it deposit each month?
Victory Markets, LLC ("VML") has a bank loan with a total principal of $3,800,000. The stated annual interest rate for the loan is 8.40%, and the loan is to be amortized with monthly payments over 6 years. VML wants the bank to change the provisions of the loan such that payments are made on an annual basis. What would be the economically equivalent annual interest rate (i.e., economically equivalent to 8.40% compounded monthly) for a loan with annual payments? 8.6632% 8.7311% 9.0023% 8.5987%
A lot purchased for $4,500 is held for five years and sold for $13,500. The average annual property tax is $45 and may be accounted for at an interest rate of 12%. The income tax rate on the long term capital gain is 15% of the gain. What is the rate of return on the investment if the allowance for inflation is treated at an average annual rate of 7%?
The Anderson Co. wants to borrow $10,000 at the beginning of each year for 15 years at 5 percent APR. The firm will repay this money in one lump sum at the end of year 15. How much of the firm's loan repayment is due to the $10,000 it received in year 6
Lorkay Seidens Inc. just borrowed $25,000. The loan is to be repaid in equal installments at the 22 end of each of the next five years, and the interest rate is 10 percent. a. Set up an amortization schedule for the loan. b. How large must each annual payment be if the loan is for $50,000? Assume that the interest rate remains at 10 percent and that the loan is paid off over five years. c. How large must each payment be if the loan is for $50,000, the interest rate is 10 percent, and the loan is paid off in equal installments at the end of each of the next 10 years? This loan is for the same amount as the loan in part (b), but the payments are spread out over twice as many periods. Why are these payments not half as large as the payments on the loan in part (b)?
Compute the specified quantity. You are expecting a tax refund of $4,000 in 10 weeks. A tax preparer offers you an "interest-free" loan of $4,000 for a fee of $50 to be repaid by your refund check when it arrives in 10 weeks. Thinking of the fee as interest, what weekly simple interest rate would you be paying on this loan (as a percent)? What is the corresponding annual rate (as a percent)? weekly simple interest rate % annual simple interest rate %
Your company is planning to borrow $1,000,000 on a 5-year, 15%, annual payment, fully amortized term loan. What fraction of the payment made at the end of the second year will represent repayment of principal?
Fenland Company plans to retire $130 million in bonds in five years. To save for the retirement, the company plans to make annual deposits into an account at the beginning of each year during that period. The account is expected to earn 8% interest compounded annually. At the end of the five years, there needs to be enough money in the account to pay off the bonds. What amount does Fenland need to invest at the beginning of each year? Multiple Choice $20,518,001 $21,780,574 $27,925,324 Cannot be determined from the given information