Question: Compressed APV with Nonconstant Growth Sheldon Corporation projects the following free cash flows (FCFs) and interest expenses for the next 3 years, after which FCF
Compressed APV with Nonconstant Growth Sheldon Corporation projects the following free cash flows (FCFs) and interest expenses for the next 3 years, after which FCF and interest expenses are expected to grow at a constant 8% rate. Sheldon's unlevered cost of equity is 11% its tax rate is 35%. Year 1 2 3 Free cash flow ($ millions) Interest expense ($ millions) $20 $8 $30 $9 $40 $10 a. What is Sheldon's unlevered horizon value of operations at Year 3? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places. $ million b. What is the current unlevered value of operations? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places. $ million c. What is horizon value of the tax shield at Year 3? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places. $ million d. What is the current value of the tax shield? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places. $ million e. What is the current total value of the company? Enter your answers in millions. For example, an answer of $10,550,000 should be entered as 10.55. Do not round intermediate calculations. Round your answer to two decimal places. $ million
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