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What is the horizon value of the interest tax shield

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Reference no: EM133119283

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

$75 

$110 

$125 

What is the horizon value of the interest tax shield?

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

Reference no: EM133119283

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