# How is the present value of tax shield of constant and perpetual debt derived?

According to this site, the present value of tax shield of constant and perpetual debt is:

corporate tax rate × interest payment ÷ expectd return on debt

I understand the part about "corporate tax rate × interest payment". But why is expectd return on debt be divided here? (I think that it is also not from summing geometric sequence.)

• In general you find the value of a perpetuity by dividing the annual payment by the interest rate: $PV=\frac{C}{i}$ (so called Consol Formula). Here for $i$ they are using "expected return on debt". – noob2 Oct 14 '20 at 14:52
• Thank you. I find answer here: quant.stackexchange.com/questions/22294/… – Aqqqq Oct 14 '20 at 14:55