Question
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
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 25%.
Year | |||
1 | 2 | 3 | |
Free cash flow ($ millions) | $20.0 | $30.0 | $40.0 |
Interest expense ($ millions) | $12.8 | $14.4 | $16.0 |
Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answers to two decimal places.
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What is Sheldon's unlevered horizon value of operations at Year 3?
$ million
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What is the current unlevered value of operations?
$ million
-
What is horizon value of the tax shield at Year 3?
$ million
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What is the current value of the tax shield?
$ million
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What is the current total value of the company?
$ million
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