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A company has expected earnings before interest and taxes of $1,350,000, an unlevered cost of capital of 9.5 percent, and a tax rate of 28
A company has expected earnings before interest and taxes of $1,350,000, an unlevered cost of capital of 9.5 percent, and a tax rate of 28 percent. The company has $4,200,000 of debt that carries a 4.5 percent coupon. The debt is selling at par value. Assume the firm maintains this debt amount forever. What is the interest tax shield of the firm in a given year? What is the value of the firm? $10,206,316 $10,506,632 $10,806,947 $11,107,263 $11,407,579
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