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Markum Enterprises is considering permanently adding an additional $ 200 million of debt to its capital structure. Markum's corporate tax rate is 30 %. a.

Markum Enterprises is considering permanently adding an additional $ 200 million of debt to its capital structure. Markum's corporate tax rate is 30 %.

a. Absent personal taxes, what is the value of the interest tax shield from the new debt?

b. If investors pay a tax rate of 40 % on interest income, and a tax rate of 25 % on income from dividends and capital gains, what is the value of the interest tax shield from the new debt?

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