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Suppose high-grade taxable bonds trade at a 5% yield and high-grade tax exempt municipal bonds with the same maturity trade at a 3.5% yield. If

Suppose high-grade taxable bonds trade at a 5% yield and high-grade tax exempt municipal bonds with the same maturity trade at a 3.5% yield. If both bonds trade at par and corporations pay taxes at 40% and individuals pay taxes at 15% on equity, what is the PV(lnterest Tax Shields) per dollar of debt

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