What is the total value of the interest tax shield

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Reference no: EM133496389

Case: Wilde Software Development has a 13% unlevered cost of equity. Wilde forecasts the following interest expenses, which are expected to grow at a constant 4% rate after Year 3. Wilde's tax rate is 25%.

	Year 1	Year 2	Year 3
Interest expenses	$70	$95	$125

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

Question 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: EM133496389

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