D. L. Tuckers has $57,000 of debt outstanding that is selling at par and has a coupon rate of 7.15 percent. The tax rate is 21 percent. What is the present value of the tax shield?
A) $11,647
B) $12,791
C) $13,106
D) $12,200
E) $11,970

Question

Quizplus · Accepted Answer

The present value of the tax shield can be calculated using the formula: PV of tax shield = Tax rate * Amount of debt. So, it's 0.21 * $57,000 = $11,970.

D L Tuckers Has $57,000 of Debt Outstanding That Is Selling