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Question 6 10 pts Assume we have two firms (L and U) that are identical except for capital structure. Firm U is unlevered (holds no
Question 6 10 pts Assume we have two firms (L and U) that are identical except for capital structure. Firm U is unlevered (holds no debt), and Firm L is levered (holds debt). Assume the EBIT of both firms is $50,000, and both firms are taxed at a 40% rate. Assume Firm L has $12,000 of perpetual bonds outstanding, on which it pays 10%. Find the present value of the interest tax shield for Firm L. $3,080 $4,800 $1,656 $334.4
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