Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question

How did you compute the tax shield? because when I multiply the total dedcution with the rate, it gives me a different answer. 

Step 4 Total After tax cash Cash outflows Tax shields deductions outflows= Cash Year =Interest + Depreciation Interest =Deductions * =Depr + outflows- Deductions Principal repaid 0.35 Interest after tax 1 1734000 1275000 459000 1734000 693600 1040400 1619250 1275000 344250 1619250 647700 971550 3 1504500 1275000 229500 1504500 601800 902700 4 1389750 1275000 114750 1389750 555900 833850 3748500
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Transcribed Image Text:Step 4 Total After tax cash Cash outflows Tax shields deductions outflows= Cash Year =Interest + Depreciation Interest =Deductions * =Depr + outflows- Deductions Principal repaid 0.35 Interest after tax 1 1734000 1275000 459000 1734000 693600 1040400 1619250 1275000 344250 1619250 647700 971550 3 1504500 1275000 229500 1504500 601800 902700 4 1389750 1275000 114750 1389750 555900 833850 3748500
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