if the tax rate is 23%, the amount of the annual tax shield on debt will be $87,975.
Total Interest = Total Bonds * Face Value * Coupon Rate
Total Interest = (5,000 bonds*$ 1,000) * 7.65%
Total Interest = $5,000,000 * 7.65%
Total Interest = $ 382,500
Annual Tax Shield =Total Interest * Tax Rate
Annual Tax Shield = $382,500*23%
Annual Tax Shield = $87,975
In conclusion, if the tax rate is 23%, the amount of the annual tax shield on debt is $87,975.
Read more about Annual Tax Shield
brainly.com/question/7549569
