Suppose the expected free cash flow for Year 1 is $250,000 but it is expected to grow unevenly over the next 3 years: FCF2 = $290,000 and FCF3 = $320,000, after which it will grow at a constant rate of 7%. The expected interest expense at Year 1 is $80,000, but it is expected to grow over the next couple of years before the capital structure becomes constant: Interest expense at Year 2 will be $95,000, at Year 3 it will be $120,000 and it will grow at 7% thereafter.

Please use these numbers:

Tax Rate: 40%

Unlevered Cost of Equity: 14%

Value of Firm: Firm U = 3,571,429, Firm L = 3,571,429

Value of Equity: Firm U = 3,571,429 , Firm L = 2,571,429

Levered Cost of Equity: = 16.33%

WACC = 14%

What is the estimated horizon unlevered value of operations (i.e., the value at Year 3 immediately after the FCF at Year 3)?

What is the current unlevered value of operations?

What is the horizon value of the tax shield at Year 3?

What is the current value of the tax shield?

What is the current total value?

Please Show Formulas!! Thanks!