Summit Builders has a market debt-equity ratio of 1.05 and a corporate tax rate of 21%, and it pays 7% interest on its debt. The interest tax shield from its debt lowers Summit's WACC by what amount? WACC is lowered by %. (Round to two decimal places.)

Summit Builders has a market debt-equity ratio of 1.05 and a corporate tax rate of 21%, and it pays 7% interest on its debt. The interest tax shield from its debt lowers Summit's WACC by what amount? WACC is lowered by %. (Round to two decimal places.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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Summit Builders has a market debt-equity ratio of 1.05 and a corporate tax rate of 21%, and it pays 7% interest on its debt. The interest tax shield from its debt lowers Summit's WACC by what amount?
WACC is lowered by
%. (Round to two decimal places.)

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