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Nielson Motors has no debt, and maintains a policy of holding $80 million in excess cash reserves, invested in risk-free treasury securities currently yielding 3%.
Nielson Motors has no debt, and maintains a policy of holding $80 million in excess cash reserves, invested in risk-free treasury securities currently yielding 3%. If Nielson plans to maintain this $80 million cash reserves permanently and the company has a 21% corporate tax rate, calculate the annual interest tax shield and the present value of total tax shield.
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