Quantum Design, Inc. is considering adding debt to their capital structure. Currently, the value of Quantum Designs is $3,000,000 and they are all-equity financed. The CFO would like to issue debt; specifically, $1,000,000 worth of bonds. This debt lasts for five years (it is not permanent!). The annual interest on the bonds would be set at 5%. The CFO estimated that this is the appropriate required rate of return demanded by bondholders of similar debt issues. Quantum Designs pays taxes at a rate of 30%. Calculate the present value of the interest tax shield.

Group of answer choices

$15,000

$64,942

$115,826

$300,000