Question
Wilde Software Development has a 12% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 5%
Wilde Software Development has a 12% 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 | $85 | $115 | $130 |
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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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Analysis For Financial Management
Authors: Robert C. Higgins
10th International Edition
007108648X, 9780071086486
