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Problem:

The benefits of debt. A company plans to issue $1 million worth of debt at a YTM of 9%. The debt is trading at par. The company's marginal corporate tax rate is 35%.

Required:

Question: What is the present value of the tax savings in perpetuity?

Note: Show supporting computations in good form.

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M91166837

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