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What is the present value of the interest tax shields

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Reference no: EM132781025

Question - Your firm currently has $120 million in debt outstanding with a 6% interest rate. The terms of the loan require the firm to repay $30 million of the balance each year. Suppose that the marginal corporate tax rate is 21%, and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this debt?

Reference no: EM132781025

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