There is an unlevered firm which next year generates a free cash flow of $5$ that is

expected to grow at a rate of $3\%.$ The unlevered cost of capital is $10\%.$

The firm considers issuing perpetual debt worth $10.$ This debt has an interest rate of

$5\%$ and the corporate tax rate is $15\%.$

What is the PV of the debt tax shield?

Answer: $1\mathrm{.}500$