-Company Total market Value = $6million -200,000 shares outstanding -$2 million worth of bonds issued at 8% interest, uses proceeds to buy back ordinary shares -Corporate tax rate of 30% Calculate...

-Company Total market Value = $6million

-200,000 shares outstanding

-$2 million worth of bonds issued at 8% interest, uses proceeds to buy back ordinary shares

-Corporate tax rate of 30%

Calculate Share price before bond Issue

Calculate present value of tax shield that the company acquires through the bond issue