Flying Tiger Corp is currently unlevered, has equity valued at $575000, and has earnings before interest and tax (EBIT) of $50000. In order to save on taxes, FT's CEO suggests that the firm should issue new debt to the market and use the proceeds of the debt issue to retire a portion of its equity. The capital structure change results in $100000 of new debt with an annual interest expense of 10 percent. Assume no other changes to Flying Tiger. a. How much in taxes will Flying Tiger save, per year, as a result of the decision to issue debt and retire equity? Use a corporate tax rate of 40 percent.
b. Suppose that the debt is permanent, meaning that this new level of debt will stay on the books year after year forever. Under this scenario determine the how much in value the permanent debt tax shields provide?

2. the external environment (connect)choose whether each example belongs in the general, task, or internal environment. exampleenvironmenta worldwide recession task environment / general environment / internal environmentlocal mothers asking their community grocery store to carry no-salt cheerios-type cereal for their babies task environment / general environment / internal environmentchoose the phrase that best completes the following sentence. the relationship between the task environment and the general environment is best described as: a one-way system: changes in the task environment affect the general environment, but changes in the general environment do not affect the task environment. an open system: changes in the task environment affect the general environment, and changes in the general environment affect the task environment. a one-way system: changes in the general environment affect the task environment, but changes in the task environment do not affect the general environment. a closed system: changes in the general environment do not affect the task environment, and changes in the task environment do not affect the general environment.©bloomberg via getty imagesmanagement in the newsin april 2010, the explosion of british petroleum’s (bp) deepwater horizon oil drilling rig and the accompanying oil spill dramatically changed the external environment in which all oil companies operate. the explosion released more oil than any other accidental spill in history and had a huge impact on the waters and surrounding communities of the gulf coast. the conditions that led to the spill, the attempts to stop the spill, and the clean-up and aftermath of the spill prompted debates in the u. s. senate, concern on wall street, and attention from companies all over the world. match each oil spill event with a specific dimension of the general environment. eventgeneral environment dimensionbp stock prices falling 25% during the first month after the oil spill oil seeping into pelican nesting grounds, which will place the brown pelican back on the endangered species list people moving from louisiana to oklahoma to avoid the effects of the spill