Blue Sky Enterprises has no debt and an equity cost of capital of 10%. Blue Sky's current total firm value (Vu) is $120 million, and its free cash flows are expected to grow at 2% per year. Blue Sky's corporate tax rate is 35%. Assume that the firm is expected to run forever. What is the Blue Sky's firm's expected free cash flow in year 1 ? Suppose Blue Sky adds $50 million in permanent debt and uses the proceeds to repurchase shares. That is, after the recapitalization, Blue Sky will have a debt level of $50 million and equity value of $70 million. What will Blue Sky's firm value be in this case? Suppose instead Blue Sky decides to maintain an interest expense of $1.5 million going forward. What will Blue Sky's levered value be in this case? Please use a discount rate of 5% to calculate the present value of interest tax shield. Blue Sky Enterprises has no debt and an equity cost of capital of 10%. Blue Sky's current total firm value (Vu) is $120 million, and its free cash flows are expected to grow at 2% per year. Blue Sky's corporate tax rate is 35%. Assume that the firm is expected to run forever. What is the Blue Sky's firm's expected free cash flow in year 1 ? Suppose Blue Sky adds $50 million in permanent debt and uses the proceeds to repurchase shares. That is, after the recapitalization, Blue Sky will have a debt level of $50 million and equity value of $70 million. What will Blue Sky's firm value be in this case? Suppose instead Blue Sky decides to maintain an interest expense of $1.5 million going forward. What will Blue Sky's levered value be in this case? Please use a discount rate of 5% to calculate the present value of interest tax shield