Triad Corporation has established a joint venture with Tobacco Road Construction, Inc.,

to build a toll road in North Carolina. The initial investment in paving equipment is $$80\mathrm{.}5$

million. The equipment will be fully depreclated using the straight$-$line method over its

economic life of five years. Earnings before interest, taxes, and depreciation collected

from the toll road are projected to be $$12\mathrm{.}2$ million per annum for $20$ years starting from

the end of the first year. The corporate tax rate is $25$ percent. The required rate of return

for the project under all$-$equity financing is $13$ percent. The pretax cost of debt for the

joint partnership is $9$ percent. To encourage investment in the country's infrastructure,

the U$.$S$.$ government will subsidize the project with a $$25\mathrm{.}5$ million, $15-$year loan at an

Interest rate of $5\mathrm{.}5$ percent per year. All principal will be repaid in one balloon payment

at the end of Year $15.$ The company issued subsidized debt instead of Issuing debt at the

terms it normally would. Assume the face amount and maturity of the debt issue are the

same.

Calculate the gain or loss from subsidized debt. $($Do not round Intermedlate

calculations and enter your answer in dollars, not millions of dollars, rounded to $2$

decimal places, e$.$g$.,1,234,567\mathrm{.}89)$