Question: Problem Suppose DFB plans to pay $ 100 million in interest each year for the next 10 years, and then to repay the principal of

Problem Suppose DFB plans to pay $ 100 million in interest

Problem Suppose DFB plans to pay $ 100 million in interest each year for the next 10 years, and then to repay the principal of $2 billion in year 10. These payments are risk free, and DFB's marginal tax rate will remain 35% throughout this period. If the risk-free interest rate is 5%, by how much does the interest tax shield increase the value of DFB

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