What is the amount of the annual interest tax shield for a firm with $3 million in debt that pays 12% interest if the firm is in the 35% tax bracket?
A) $126,000
B) $234,000
C) $360,000
D) $1,050,000

Name: What is the amount of the annual interest tax shield for a firm with $3 million in debt that pays 12% interest if the firm is in the 35% tax bracket? A) $126,000 B) $234,000 C) $360,000 D) $1,050,000
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Question

Quizplus · Accepted Answer

Annual interest tax shield = 0.12 × $3m × 0.35 = $126,000

What Is the Amount of the Annual Interest Tax Shield