CGN's most recent and projected financial statements and projected free cash flow are shown below. All items are expected to grow at 5% after the last year of projections. As part of an APV valuation, calculate the value of SMC's tax shields. Assume the following information:

10. Calculate the value of CGN's tax shields.

a. $12.58

b. $14.47

c. $16.64

d. $19.14

e. $22.01 The answer is b. $14.47

2017 2018E Debt Interest expense Free cash flow 2019E S20.00$25.00 $27.00 1.80 $1.90 $15.00$16.00 $17.00 $1.40 ax rate WACC Levered required return on equity Unlevered required return on equit 40% 8% 12% 10% 5% rowth rate after 2019 2017 2018E Debt Interest expense Free cash flow 2019E S20.00$25.00 $27.00 1.80 $1.90 $15.00$16.00 $17.00 $1.40 ax rate WACC Levered required return on equity Unlevered required return on equit 40% 8% 12% 10% 5% rowth rate after 2019