Kitto Electronics Data Kitto Electronics Expects an EBIT of $200,000 for Year-1.EBIT Is

Multiple Choice

Kitto Electronics Data
Kitto Electronics expects an EBIT of $200,000 for Year-1.EBIT is expected to grow at 6% thereafter.The tax rate is 25%.In order to support growth, Kitto must reinvest 20% of its EBIT in net operating assets.Kitto has $300,000 in 8% debt outstanding, and a similar company with no debt has a cost of equity of 11%.
-Refer to data for Kitto Electronics.Using the compressed adjusted present value model, what is the value of Kitto's tax shield?

A) $97,741
B) $102,885
C) $108,300
D) $114,000
E) $120,000