Solution-Horizon value of the interest tax shield

Horizon value of the interest tax shield

Reference no: EM133060941

Wilde Software Development has a 10% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 3% rate after Year 3. Wilde's tax rate is 25%.

	Year 1	Year 2	Year 3
Interest expenses	$75	$105	$125

What is the horizon value of the interest tax shield? Do not round intermediate calculations.

What is the total value of the interest tax shield at Year 0? Do not round intermediate calculations.

Reference no: EM133060941

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Horizon value of the interest tax shield

Reference no: EM133060941

Reference no: EM133060941

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