Question
Wilde Software Development has a 13% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 4%
Wilde Software Development has a 13% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 4% rate after Year 3. Wilde's tax rate is 25%.
| Year 1 | Year 2 | Year 3 | |
| Interest expenses | $75 | $95 | $115 |
What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent.
$
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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Cornerstones Of Financial Accounting
Authors: Jay Rich, Jeff Jones
3rd Edition
1285424409, 978-1285423678
