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Adams Co. has a forecast EBIT of $300,000 in perpetuity. Adam's return on equity is 13%...

Adams Co. has a forecast EBIT of $300,000 in perpetuity. Adam's return on equity is 13% and its cost of debt is 7%. Adam's tax rate is 28%. If Adams has $1 million in debt, what is the value of its tax-shield?

1. $1,661,538

2. $70,000

3 $1,941,538

4. $4,000,000

5. $280,000

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