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Taggart Transcontinental has an equity cost of capital of 12%, a market capitalization of $15 billion, an enterprise value of $20 billion, a debt cost

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Taggart Transcontinental has an equity cost of capital of 12%, a market capitalization of $15 billion, an enterprise value of $20 billion, a debt cost of capital of 7%, and a marginal tax rate of 25%. Assume that Taggart Transcontinental maintains a constant debt-equity ratio. Currently Taggart Transcontinental is considering a project with average risk that is projected to generate the follawing cash flows: Question 8 The interest expense generated by the project in year one is clasest to? 15.8312.3810.758.068.35 Question 9 The interest tax shield generated by the project in year two is closest to? 8.35 6.27 0.99 2.97 2.09 Question 10 The present value in year zero of all of the interest tax shields generated by the project is closest to? 4.86 4.64 5.14 5.38 14.58 Question 11 The Free Cash Flow to Equity (FCFE) in year zero for the project is closest to? 153.520.00+153.52196.48350.00

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