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What would be the present value of lcms interest tax

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Reference no: EM132879160

Question 1: LCMS Industries has $70 million in debt outstanding. The firm will pay only interest on this debt (the debt is perpetual). LCMS' corporate tax rate is 21% and the firm pays a rate of 8% interest on its debt. Assuming that the risk-appropriate discount rate for the tax shield is only 6%, what would be the present value of LCMS' interest tax shield?

Reference no: EM132879160

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