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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 Tc = .35.

a. A $2,200, one-year loan at 9%.

b. A seven-year loan of $2,200 at 9%. Assume no principal is repaid until maturity.

c. A $2,200 perpetuity at 8%.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92312983

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