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please answer both parts they go together Your firm currently has $100 million in debt outstanding with a 10% interest rate. The terms of the
please answer both parts they go together
Your firm currently has $100 million in debt outstanding with a 10% interest rate. The terms of the loan require it to repay $25 million of the balance each year. Suppose the marginal corporate tax rate is 35%, and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this debt? The present value of the interest tax shields is $ million. (Round to two decimal places.) Assume that Microsoft has a total market value of $299.8 billion and a marginal tax rate of 35%. If it permanently changes its leverage from no debt by taking on new debt in the amount of 12.7% of its current market value, what is the present value of the tax shield it will create? The present value of the tax shield is $ billion. (Round to two decimal places.)Step by Step Solution
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