The interest tax shield increase

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ECB borrows $2000000 USDs by issuing 4-year bonds. ECB's cost of debt is 6%, so it will need to pay $120000 USDs in interest each year for the next 4 years, and then repay the principal $2000000 USD in year 4. ECB's marginal tax rate will remain 35 throughout this period. By how much (in USDs) does the interest tax shield increase the value of ECB?

Reference no: EM131308822

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