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Bay Transport Systems (BTS) currently has $50 million in debt outstanding. In addition to 9.0% interest, it plans to repay 6% of the remaining balance

Bay Transport Systems (BTS) currently has

$50

million in debt outstanding. In addition to

9.0%

interest, it plans to repay

6%

of the remaining balance each year. If BTS has a marginal corporate tax rate of

21%,

and if the interest tax shields have the same risk as the loan, what is the present value of the interest tax shield from the debt?

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