Question
Wilde Software Development has an 11% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 5%
Wilde Software Development has an 11% 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 | $90 | $115 | $145 |
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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Mathematics Of Finance
Authors: Petr Zima, Robert L. Brown
5th Edition
0070871353, 978-0070871359
