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Compute the present value of interest tax shields generated

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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%.

Reference no: EM131126450

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