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Company U is considering a leveraged buyout for the company. In order to execute the buyout, management have tentatively secured a $15 million loan at
Company U is considering a leveraged buyout for the company. In order to execute the buyout, management have tentatively secured a $15 million loan at 8.4% per annum. The terms of the loan include that it be paid off in three equal annual installments of $5 million. What tax shield benefit that will be gained from the loan if the company is exceedingly profitable and it pays 25% tax on taxable income?
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