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You are given the following information about a company: i) The company has 5000 in earnings before interest and taxes. ii) The company has 12,000
You are given the following information about a company:
i) The company has 5000 in earnings before interest and taxes.
ii) The company has 12,000 in debt.
iii) The debt cost of capital is rD = 4%.
iv) The companys tax rate is c = 30%.
Calculate the value of the tax shield.
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