Answer:
$29.12 million
Explanation:
Data given in the question
Interest payment = $18 million
Time period = 6 years
Tax rate = 35%
The cost of debt = 8%
So now annual interest tax shield is
= $18 million × 0.35
= $6.3 million
Now the value of the interest rate tax shield is
= Annual interest tax shield × PVIF factor for 8% at 6 years
= $6.3 million × 4.6229
= $29.12 million