Western Lumber Company expects to have free cash flow in the coming year of $4.25m and is expected to grow at 4% per year thereafter. The company has an equity cost of 10% and a debt cost of 6% and pays corporate tax at 30%. If the company maintains a debt-to-equity ratio of 0.50, what is the value of the interest tax shield?
Q. Western Lumber Company expects to have
and is expected to grow at 4% per year thereafter. The company has an equity cost of
10% and a debt cost of 6% and pays corporate tax at 30%. If the company maintains a
debt-to-equity ratio of 0.50, what is the value of the interest tax shield?
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