What is the total value of the interest tax shield

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Question - 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 Interest expenses $80

Year 2 Interest expenses $115

Year 3 Interest expenses $130

-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: EM133014562

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