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For a company, you are given (i) Unlevered cost of capital 8%, Cost of equity capital 20%, Cost of debt capital 5% (ii) Free cash
For a company, you are given
(i) Unlevered cost of capital 8%, Cost of equity capital 20%, Cost of debt capital 5%
(ii) Free cash flows are 2 million this year, and grow 4% per year.
(iii) The company maintains a constant debt-equity ratio.
(iv) The corporate tax rate is 21%.
Calculate the present value of the interest tax shield.
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