Vinny's Vineyard (VV) has a current market value of $100 million and a D/E ratio of 0.2. VV believes they can increase value by increasing leverage and they intend to double their current debt and use the proceeds to repurchase stock. If VV's tax rate is 28%, then what is the value of the debt tax shield this plan will create?

Answer rating: 100% (QA)

To calculate the value of the debt tax shield we need to determine the increase in interest expense ... View the full answer