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Horizon value of the interest tax shield

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Reference no: EM133061630

Wilde Software Development has a 14% 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

$70 

$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.

Reference no: EM133061630

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