Question 1 Walmart paid out $252 million as debt interest. How much more tax would Walmart...

 

Transcribed Image Text:

Question 1 Walmart paid out $252 million as debt interest. How much more tax would Walmart have paid if the firm had been entirely equity- financed? What would be the present value of Walmart's interest tax shield if the company planned to keep its borrowing permanently at this level? Assume an interest rate of 11% and a corporate tax rate of 35%. O $88.2 million more tax; $801.8 million present value tax shield O $801.8 million more tax; $88.2 million present value tax shield $720 million more tax; $79.2 million present value tax shield 4 pts O $79.2 million more tax; $720 million present value tax shield Question 1 Walmart paid out $252 million as debt interest. How much more tax would Walmart have paid if the firm had been entirely equity- financed? What would be the present value of Walmart's interest tax shield if the company planned to keep its borrowing permanently at this level? Assume an interest rate of 11% and a corporate tax rate of 35%. O $88.2 million more tax; $801.8 million present value tax shield O $801.8 million more tax; $88.2 million present value tax shield $720 million more tax; $79.2 million present value tax shield 4 pts O $79.2 million more tax; $720 million present value tax shield

Answer rating: 100% (QA)

It looks like youve presented a finance question regarding the concept of tax shields provided by de... View the full answer