Question
Tax Shield Value Wilde Software Development has a 10% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at
Tax Shield Value
Wilde Software Development has a 10% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 5% rate after Year 3. Wilde's tax rate is 25%.
| Year 1 | Year 2 | Year 3 | |
| Interest expenses | $80 | $105 | $135 |
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What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent.
$
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What is the total value of the interest tax shield at Year 0? Do not round intermediate calculations. Round your answer to the nearest cent.
$
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Fundamentals Of Cost Accounting
Authors: William Lanen, Shannon Anderson
2nd Edition
0071332618
