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Suppose a firm plans to take on $ 1 0 9 0 . 9 0 in debt in order to finance a large project. The
Suppose a firm plans to take on $ in debt in order to finance a large project. The firm will take on the debt at time zero and pay off the debt over five years with equal payments each year and the interest rate is per year. For simplicity, assume that interest is calculated once per year using the previous year's outstanding balance. If the tax rate is and the discount rate is what is the present value of the tax shield the firm gets from this debt? Round to the nearest penny.
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