(Solution) - Establishment Industries borrows 800 million at an interest rate of -(2025 Original AI-Free Solution)

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Establishment Industries borrows $800 million at an interest rate of 7.6%. Establishment will pay tax at an effective rate of 35%. What is the present value of interest tax shields if:
a. It expects to maintain this debt level into the far future?
b. It expects to repay the debt at the end of 5 years?
c. It expects to maintain a constant debt ratio once it borrows the $800 million and rassets = 10%?