What is the pv of the tax savings from financing the project

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Reference no: EM131241314

Your firm is in a 40% combined federal and state marginal income tax bracket. Your annual income is $500,000 per year for 2 years.

If you finance some project with a $1,300,000 mortgage at an interest rate of 8%, how much will Uncle Sam receive?

If you finance the project with cash, how much will Uncle Sam receive?

If other equivalent firms are offering investors expected rates of return of 10%, what is the PV of the tax savings from financing the project with a mortgage?

Reference no: EM131241314

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