Avco is investing $100 million in a new project. To finance this investment the company will issue $100 million of new debt in the form of a 4-year bond. The bond will be repaid in one bullet payment after 4 years. The cost of debt associated with this bond is 4% and the marginal corporate tax rate of Avco is 20%.

What is the present value of the tax shields  associated with this project?

Answer rating: 100% (QA)

The tax shield associated with this project is the tax savings that result from the taxdeductibility ... View the full answer