Company EverGrowth has a 45% marginal tax rate and is considering whether it should borrow more debt
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Company EverGrowth has a 45% marginal tax rate and is considering whether it should borrow more debt to finance a major project that will cost $26 million. The project's expected return is 9.05%, and with its current credit rating, the company's borrowing interest rate is 14.22%. How much more debt should the company borrow to cover the project's expected cost of $26? Assuming that the company's target debt ratio is 50%.
Related Book For
Principles of Taxation for Business and Investment Planning 2019 Edition
ISBN: 9781260161472
22nd edition
Authors: Sally Jones, Shelley C. Rhoades-Catanach, Sandra R Callaghan
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