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Now, the company takes a 50-million loan to make distributions to the shareholders. The interest rate on the loan is 5%. There will be no
Now, the company takes a 50-million loan to make distributions to the shareholders. The interest rate on the loan is 5%. There will be no principal repayments made until the loan is paid back in full in year 5. Due to financial distress, 30% of Company A's EBITs will be lost while it carries the 50-million debt. Capital gain tax is zero and dividend tax is 25%
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