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To kick start its economy, Country X is offering subsidised loans to Australian companies willing to set up operations there. The loan is $25 million

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To kick start its economy, Country X is offering subsidised loans to Australian companies willing to set up operations there. The loan is $25 million at 3% when the market interest rate for such an investment is 8%. The loan principal is to be paid off in five equal annual instalments. (1) What is the before tax value of this interest subsidy? [5 points]

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