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Acme Storage has a market capitalization of $221 million, and debt outstanding of $328 million. Acme plans to maintain this same debt-equity ratio in the
Acme Storage has a market capitalization of $221 million, and debt outstanding of $328 million. Acme plans to maintain this same debt-equity ratio in the future. The firm pays an interest of 7.7% on its debt and has a corporate tax rate of 21%. a. If Acme's free cash flow is expected to be $49.41 million next year and is expected to grow at a rate of 3% per year, what is Acme's WACC? b. What is the value of Acme's interest tax shield?
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