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Wilde Software Development has a 12% unlevered cost of equity

Accounting

Wilde Software Development has a 12% 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 - $75

Year 2 $100

Year 3 $135

 

  • A. 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.

$

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