Wilde Software Development has a 12% 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 $85 $105 $135 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. $
Wilde Software Development has a 12% 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 $85 $105 $135 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. $
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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
Transcribed Image Text:Wilde Software Development has
a 12% 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 $85 $105 $135
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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