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What is the horizon value of the interest tax shield

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Reference no: EM132950758

Wilde Software Development has a 13% 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     $90            $115                       $160

Problem 1: What is the horizon value of the interest tax shield? Do not round intermediate calculations. Round your answer to the nearest cent.

Problem 2: 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: EM132950758

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