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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 7% rate. Sheldons unlevered cost of equity is 11% its tax rate is 45%.
Year | |||
1 | 2 | 3 | |
Free cash flow ($ millions) | $20 | $30 | $40 |
Interest expense ($ millions) | $8 | $9 | $10 |
- What is Sheldons unlevered horizon value of operations at Year 3? 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 answer to two decimal places.
$ million
- What is the current unlevered value of operations? 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 answer to two decimal places.
$ million
- What is horizon value of the tax shield at Year 3? 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 answer to two decimal places.
$ million
- What is the current value of the tax shield? 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 answer to two decimal places.
$ million
- What is the current total value of the company? 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 answer to two decimal places.
$ million
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