Calculate the following: Current D/E? Total debt Total Equity Tax rate 30% 1. Interest tax shield?...

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Calculate the following: Current D/E? Total debt Total Equity Tax rate 30% 1. Interest tax shield? 1,006,765 1,580,858 Determine the present value of interest tax shield if XRO increases its level of debt, measured by Debt-to-Equity ratio (D/E), with a span of 15%. The additional debt is to substitute the outstanding equity (i.e., share buyback). Your starting point should be the current level of debt that XRO adopts. Suppose XRO has a policy that Debt- to-Equity ratio is capped at 100%. Debt level (D/E) Current D/E Current D/E + 15% Current D/E + 30% (D/E < 100%) PV of Interest Tax Shield Calculate the following: Current D/E? Total debt Total Equity Tax rate 30% 1. Interest tax shield? 1,006,765 1,580,858 Determine the present value of interest tax shield if XRO increases its level of debt, measured by Debt-to-Equity ratio (D/E), with a span of 15%. The additional debt is to substitute the outstanding equity (i.e., share buyback). Your starting point should be the current level of debt that XRO adopts. Suppose XRO has a policy that Debt- to-Equity ratio is capped at 100%. Debt level (D/E) Current D/E Current D/E + 15% Current D/E + 30% (D/E < 100%) PV of Interest Tax Shield

Answer rating: 100% (QA)

2 2 To calculate the interest tax shield we can use the formula Interest Tax Shield Interest Expense Tax Rate Given that the total debt is 1006765 and ... View the full answer