What is the present value of the firms tax shield

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Reference no: EM131044704

The globe Incorporated has EBIT of $20 million for the current year. On the firm balance sheet, there is $80 million of debt outstanding that carries a coupon rate of 8 percent. Investors seek a return of 12 % on the firm, and the firm has a corporate tax rate of 40%. What is the present value of the firms tax shield?

Reference no: EM131044704

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