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Suppose a Firm Has $80 Million of Permanent Debt

Question 1

Multiple Choice

Suppose a firm has $80 million of permanent debt.If the tax rate is 35% and the cost of debt is 8%,what is the value of the interest tax shield each year?


A) $2.2 million
B) $6.4 million
C) $28 million
D) $80 million
E) $350 million

Correct Answer:

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