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What horizon value of interest tax shield for wilde software

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Reference no: EM132985187

Wilde Software Development has a 10% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 2% rate after Year 3. Wilde's tax rate is 25%.

                                   Year 1              Year 2              Year 3

Interest expenses       $85                $100              $130

Problem a. What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent.

Problem b. What is the total value of the interest tax shield at Year 0?

Reference no: EM132985187

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