Calculate how much value the interest tax shield adds

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Reference no: EM131852808

Bent Co. has FCF of 6 million per year which should grow 5% per year, the expected return on equity is 12% and rD=.06 and the firm has a D/E ratio of 0.7 with an appropriate tax rate of 37%. With the above information, value what the company is worth without an interest tax shield. Now, value the company with a tax shield and calculate how much value the interest tax shield adds.

Reference no: EM131852808

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