Question
Sheldon Corporation projects the following free cash flow (FCFs) and interest expenses for the next 3 years, after which FCF and interest expenses are expected
Sheldon Corporation projects the following free cash flow (FCFs) and interest expenses for the next 3 years, after which FCF and interest expenses are expected to grow at a constant 7% rate. Sheldon's unlevered cost of equity is 13% its tax rate is 40%
|
| Year 1 | Year 2 | Year 3 |
| Free cash flow ( $ millions) | $ 20 | $ 30 | $ 40 |
| Interest expense ( $ millions ) | $ 8 | $ 9 | $ 10 |
What is Sheldon's unlevered horizon value of operations at Year 3? What is the current unlevered value of operations? What is horizon value of the tax shield at Year 3? What is the current value of the tax shield? What is the current total value of the company?
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An Introduction To Socio-Finance
Authors: Jørgen Vitting Andersen, Andrzej Nowak
2013th Edition
3642419437, 978-3642419430
