Value of the interest tax shield, Accounting Basics

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Value of the interest tax shield

Problem:

Suppose a project financed via an issue of debt requires six annual interest payments of $20 million each year.

Required:

Question: If the tax rate is 30% and the cost of debt is 8%, what is the value of the interest tax shield?

Note: Please show basic calculation

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Accounting Basics: Value of the interest tax shield

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Accounting Basics: Value of the interest tax shield

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