What is the amount of the annual interest tax shield for a firm with $5 million in debt that pays 10% interest if the firm is in the 40% tax bracket?
A) $100,000
B) $200,000
C) $300,000
D) $400,000 Interest tax shield = interest expense x tax rate
= $5,000,000 x .1 x .40
Correct Answer:
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