Final answer:
The value of the tax shield is $0.22 million. The present value of bankruptcy and agency costs is $360,000.
Step-by-step explanation:
The value of the tax shield can be calculated as the difference between the value of the firm with debt and the value of the firm if it were unlevered. In this case, the value of the firm is $5 million and its value if unlevered would be $4.78 million. Therefore, the tax shield value is $5 million - $4.78 million = $0.22 million.
The present value of bankruptcy and agency costs is given as $360,000. However, it is not clear how this information is related to the calculation of the tax shield value.