KAHR Incorporated will have EBIT this coming year of $45 million.It will also spend $18 million on total capital expenditures,increase its net working capital by $7 million,and have $9 million in depreciation expenses.KAHR is currently an all-equity firm with a corporate tax rate of 21% and a cost of capital of 10%.If the interest rate on new KAHR debt is 8%,how much should KAHR borrow today if they want to maximize their interest tax shield?

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The Answer of KAHR Incorporated will have EBIT this coming year of $45 million.It will also spend $18 million on total capital expenditures,increase its net working capital by $7 million,and have $9 million in depreciation expenses.KAHR is currently an all-equity firm with a corporate tax rate of 21% and a cost of capital of 10%.If the interest rate on new KAHR debt is 8%,how much should KAHR borrow today if they want to maximize their interest tax shield?

KAHR Incorporated Will Have EBIT This Coming Year of $45