Tom has $100 of outstanding debt, on which it pays an interest rate = 15%/year.  Its corporate income tax rate = 20%.  Its full income statement is as follows:

  Revenues  $400
  COGS   $300
  Expenses  $  80
  EBIT   $  20
  Interest   $  15
  EBT   $    5
  Tax @ 20%  $    1
  Net Income  $    4

What is the dollar value of Tom's interest tax shield?
 

Answer rating: 100% (QA)

Calculate the dollar value of Toms interest tax shield Toms inte... View the full answer