Please show all your work.

Additionally, here is a similar example. Follow this format.

Arnell Industries has $10 million in permanent debt outstanding. The firm will pay interest only on this debt. Arnell's marginal tax rate is expected to be 30% for the foreseeable future. a. Suppose Arnell pays interest of 8% per year on its debt. What is its annual interest tax shield? b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? c. Suppose instead the interest rate on the debt were 6%. What is the present value of the interest tax shield in this case? a. Suppose Arnell pays interest of 8% per year on its debt. What is its annual interest tax shield? If Arnell pays interest of 8% per year on its debt, the annual interest tax shield is $ million. (Round to three decimal places.) b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? The present value of the interest tax shield is $ million. (Round to one decimal place.) c. Suppose instead the interest rate on the debt were 6%. What is the present value of the interest tax shield in this case? If instead the fair interest rate on the debt is 6%, the present value of the interest tax shield is $ million. (Round to one decimal place.) Arnell Industries has $65 million in permanent debt outstanding. The firm will pay interest only on this debt. Arnell's marginal tax rate is expected to be 37% for the foreseeable future. a. Suppose Arnell pays interest of 4% per year on its debt. What is its annual interest tax shield? b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? c. Suppose instead the interest rate on the debt were 12%. What is the present value of the interest tax shield in this case? a. Suppose Arnell pays interest of 4% per year on its debt. What is its annual interest tax shield? To compute the interest tax shield, use the following formula: InterestTaxShield=CorporateTaxRateInterestPayments where the interest payment is: InterestPayment=$65million4%=$2.60million Therefore, InterestTaxShield=0.37$2.60million=$0.962million If Arnell pays interest of 4% per year on its debt, the annual interest tax shield is $0.962 million. b. What is the present value of the interest tax shield, assuming its risk is the same as the loan? To determine the present value of the interest tax shield, use the following formula: PV(InterestTaxShield)=InterestRateInterestTaxShield Therefore, PV(InterestTaxShield)=0.040.962=24.1 The present value of the interest tax shield is $24.1 million. c. Suppose instead the interest rate on the debt were 12%. What is the present value of the interest tax shield in this case? The interest payment is: InterestPayment=$65million12%=$7.80million Therefore, InterestTaxShield=0.377.80=$2.886million If the interest rate on the debt were 12%, the annual interest tax shield would be $2.886 million. The present value of the interest tax shield is: PV(InterestTaxShield)=0.12$2.886million=$24.1million If instead the fair interest rate on the debt is 12%, the present value of the interest tax shield is $24.1 million