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Compute the present value of interest tax shields generated

Compute the present value of interest tax shields generated by these three debt issues. Consider corporate taxes only. The marginal tax rate is T = 0.35.

a. A $1000, one-year loan at 8%.

b. A five-year loan of $1000 at 8%. Assume no principal is repaid until maturity.

c. A $1000 perpetuity at 7%.

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Finance Basics: Compute the present value of interest tax shields generated

Reference No:- TGS01510846

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