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Swedish Match is a profitable smokeless tobacco company.In the fall of 2005, Swedish Match is considering increasing a leveraged recapitalization. Assuming Swedish Match faces a

Swedish Match is a profitable smokeless tobacco company.In the fall of 2005, Swedish Match is considering increasing a leveraged recapitalization. Assuming Swedish Match faces a 28% tax rate on income and can issue bonds at a fixed krona yield of 4.5%. how much will the company save in taxes for a SEK4 billion recapitalization? what is the value of this interest tax shield?

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