The Globe Incorporated has EBIT of $20 million for the current year.On the firm balance sheet,there is $80 million of debt outstanding that carries a coupon rate of 8 percent.Investors seek a return of 12 percent on the firm,and the firm has a corporate tax rate of 40%.What is the present value of the firm's tax shields?
A) $32,000,000
B) $30,000,000
C) $24,000,000
D) $6,400,000
Correct Answer:
Verified
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