Calculating the present value of tax shield


Compute the present value of tax shields generated by these three debt issues. Consider corporate taxes only. The marginal tax rate is Tc = .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: Calculating the present value of tax shield
Reference No:- TGS051302

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