Based on the attached spreadsheet (loosely based on the APV example in class), compute the following with a 34% tax rate: (a) Firm value according to APV where the present value of the interest tax shield is computed using Pre-tax WACC, not the cost of debt. (b) Firm value according to CCF.

70% Wed 7:41 PM apple Q Excel File Edit View Insert Format Tools Data Window Help HSU. Home Insert Draw Page Layout Formulas Data Review View APV and CCF Question for Second Test (3) ) Q Search Sheet 2+ Share Cut Autosum Calibri (Body). 11 - A A Wrap Text Custom LE FIII- Paste Format B I U A Marga & Cantar S-% ) D .00 . Insert Conditional Format Formatting as Table Cel Styles Delete Format Clear Sert & Filter Find & Selec. Yes Recover Unsaved Workbooks. We were able to save changes to one or more files. Do you want to recover them? H18 fx A B C D E F G H I K L 1 2 Interest Paid 3 $21.60 $19.10 $17.80 $16.70 $15.80 4 Free Cash Flows 5 $22.70 $7.72 $14.98 $29.80 $10.13 $19.67 $37.10 $12.61 $24.49 $40.10 $13.63 $26.47 $42.10 $14.31 $27.79 34% tax rate No depreciation, no CAPEX, no change in NWC 6 EBIT 7 -Taxes 8 = Unlevered Free Cash Flow 9 10 Unlevered Cost of Equity 11 Cost of Equity 12 Cost of Debt 13 Terminal Growth Rate 14 13.50% Pre-tax WACC or Return on Assets 24.00% 9.50% 0.00% 15 16 17 18 19 20 21 73 APV and CCF + He IA III 70% Wed 7:41 PM apple Q Excel File Edit View Insert Format Tools Data Window Help HSU. Home Insert Draw Page Layout Formulas Data Review View APV and CCF Question for Second Test (3) ) Q Search Sheet 2+ Share Cut Autosum Calibri (Body). 11 - A A Wrap Text Custom LE FIII- Paste Format B I U A Marga & Cantar S-% ) D .00 . Insert Conditional Format Formatting as Table Cel Styles Delete Format Clear Sert & Filter Find & Selec. Yes Recover Unsaved Workbooks. We were able to save changes to one or more files. Do you want to recover them? H18 fx A B C D E F G H I K L 1 2 Interest Paid 3 $21.60 $19.10 $17.80 $16.70 $15.80 4 Free Cash Flows 5 $22.70 $7.72 $14.98 $29.80 $10.13 $19.67 $37.10 $12.61 $24.49 $40.10 $13.63 $26.47 $42.10 $14.31 $27.79 34% tax rate No depreciation, no CAPEX, no change in NWC 6 EBIT 7 -Taxes 8 = Unlevered Free Cash Flow 9 10 Unlevered Cost of Equity 11 Cost of Equity 12 Cost of Debt 13 Terminal Growth Rate 14 13.50% Pre-tax WACC or Return on Assets 24.00% 9.50% 0.00% 15 16 17 18 19 20 21 73 APV and CCF + He IA