Suppose a project financed via an issue of debt requires five annual interest payments of $8 million each year. If the tax rate is 21​% and the cost of debt is 5​%, what is the value of the interest rate tax​ shield?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 16P
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Suppose a project financed via an issue of debt requires five annual interest payments of $8 million each year. If the tax rate is 21​% and the cost of debt is 5​%, what is the value of the interest rate tax​ shield?

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