1. Brick House Cafe has a tax rate of 40 percent and paid total taxes of $42,500. The company had an interest expense of $18,900. What was the value of the interest tax shield?
$17,680
$8,247
$7,560
$12,280
$17,000
2. The Tree House has a pretax cost of debt of 5.6 percent and a return on assets of 11.5 percent. The debt–equity ratio is .61. Ignore taxes. What is the cost of equity?
16.47%
15.85%
15.59%
15.10%
7.90%