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Your firm currently has $ 8 0 million in debt outstanding with a 6 % interest rate. The terms of the loan require the firm

Your firm currently has $

80

million in debt outstanding with a

6 %

interest rate. The terms of the loan require the firm to repay $

20

million of the balance each year. Suppose that the marginal corporate tax rate is

28 %,

and that the interest tax shields have the same risk as the loan. What is the present value of the interest tax shields from this

debt?

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