MMII and the effect of taxes Debt financing has one important advantage that the early MM propositions ignored: interest on debt is tax deductible. The amount that taxes are reduced because of the use of debt is called the interest tax shield Consider this case: Suppose Stoler Food Co. had an unlevered value of $80 million. Stoler's marginal tax rate is 40%, and it has $45 million in debt. According to MM's proposition with taxes, what is the levered value of the company? $35.00 million O $125.00 million O $98.00 million $62.00 million