Based on the attached spreadsheet (loosely based on the APV example in class), compute the following with a 34% tax rate:

(a) Firm value according to APV where the present value of the interest tax shield is computed using Pre-tax WACC, not the cost of debt. (10 points)

(b) Firm value according to CCF. (10 points)

The APV and CCF valuations will be identical. Note that depreciation, CAPEX, and change in NWC are all zero.

Interest Paid		$21.60	$19.10	$17.80	$16.70	$15.80
Free Cash Flows
EBIT		$22.70	$29.80	$37.10	$40.10	$42.10
-Taxes		$7.72	$10.13	$12.61	$13.63	$14.31	34% tax r
= Unlevered Free Cash Flow		$14.98	$19.67	$24.49	$26.47	$27.79
Unlevered Cost of Equity	13.50%	Pre-tax WACC or Return on Assets
Cost of Equity	24.00%
Cost of Debt	9.50%
Terminal Growth Rate	0.00%