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Problem 21-07 Compressed APV with Nonconstant Growth Sheldon Corporation projects the following free cash flows (FCFs) and interest expenses for the next 3 years, after
Problem 21-07 Compressed APV with Nonconstant Growth Sheldon Corporation projects the following free cash flows (FCFs) and interest expenses for the next 3 years, after which FCF and interest expenses are expected to grow at a constant 8% rate. Sheldon's unlevered cost of equity is 14% its tax rate is 35% Year Free cash flow ($ millions) Interest expense ($ millions) $20 $30 $40 $8$9 $10 a. What is Sheldon's unlevered horizon value of operations at Year 3? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answer to two decimal places. million b. What is the current unlevered value of operations? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answer to two decimal places million C. What is horizon value of the tax shield at Year 3? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answer to two decimal places million d. What is the current value of the tax shield? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answer to two decimal places e. What is the current total value of the company? Enter your answer in millions. For example, an answer of $1.2 mllion should be entered as 1.2, not 1,200,000. Do not round intermediate calculations. Round your answer to two decimal places million
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