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For a company you are given: (i)Unlevered cost of capital 8%, Cost of equity capital 20%, Cost of debt capital 5% (ii) Free cash flows

For a company you are given:

(i)Unlevered cost of capital 8%, Cost of equity capital 20%, Cost of debt capital 5%

(ii) Free cash flows are 2 million this year, and grow 4% per year.

(iii) The company maintains a constant debt-equity ratio.

(iv) The corporate tax rate is 21%.

Calculate the present value of the interest tax shield.

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