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Present value of the interest tax shields

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Your firm currently has $240 million in debt outstanding with an 5% interest rate. The terms of the loan require the firm to repay $60 million of the original balance each year. Suppose that the marginal corporate tax rate is 30% and that the interest tax shields have the same risk as the loan. Both Interests and taxes are paid annually. What is the present value of the interest tax shields from this debt?

Reference no: EM133059944

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