In the Year Just Past (Year 1)Hane Heavy Industries Had

In the year just past (Year 1) Hane Heavy Industries had no debt.Today is January 1 of Year 2.Hane is considering a plan to sell bonds worth $30B and use the proceeds to repurchase 2B shares (on the open market at $15/share) .If Hane maintains this new level of debt in perpetuity,then what is the present value of the resulting interest tax shields? Assume that the debt is sold immediately,that the bonds are a perpetuity,and that interest is paid at the end of each year.Assume that the coupon rate on the bonds is 3.5% and that the tax rate is 13%.

A) $3.9B
B) $7.8B
C) $13.7B
D) $26.1B
E) $30B